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Henry Schein (HSIC) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Henry Schein ( HSIC) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Henry Schein as such a stock due to the following factors:

  • HSIC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.6 million.
  • HSIC has traded 124,501 shares today.
  • HSIC traded in a range 207.4% of the normal price range with a price range of $3.71.
  • HSIC traded below its daily resistance level (quality: 45 days, meaning that the stock is crossing a resistance level set by the last 45 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on HSIC:

Henry Schein, Inc. distributes health care products and services primarily to office-based dental, medical, and animal health care practitioners. It operates in two segments, Health Care Distribution and Technology and Value-Added Services. HSIC has a PE ratio of 24.2. Currently there are 5 analysts that rate Henry Schein a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Henry Schein has been 372,300 shares per day over the past 30 days. Henry Schein has a market cap of $9.9 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.07 and a short float of 3% with 5.41 days to cover. Shares are up 0.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Henry Schein as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.66% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • SCHEIN (HENRY) INC has improved earnings per share by 13.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SCHEIN (HENRY) INC increased its bottom line by earning $4.31 versus $3.97 in the prior year. This year, the market expects an improvement in earnings ($4.90 versus $4.31).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.4%. Since the same quarter one year prior, revenues slightly increased by 5.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, SCHEIN (HENRY) INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 94.53% to $152.80 million when compared to the same quarter last year. In addition, SCHEIN (HENRY) INC has also vastly surpassed the industry average cash flow growth rate of 7.80%.

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