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New Lifetime High Today: DepoMed (DEPO)

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 DepoMed ( DEPO) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified DepoMed as such a stock due to the following factors:

  • DEPO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.2 million.
  • DEPO has traded 55,861 shares today.
  • DEPO is trading at a new lifetime high.

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More details on DEPO:

Depomed, Inc., a specialty pharmaceutical company, focuses on developing products for pain and other conditions, and diseases of the central nervous system in the United States. Currently there are 2 analysts that rate DepoMed a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for DepoMed has been 908,200 shares per day over the past 30 days. DepoMed has a market cap of $788.1 million and is part of the health care sector and drugs industry. The stock has a beta of 0.75 and a short float of 6.8% with 1.95 days to cover. Shares are up 30.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates DepoMed as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 12.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DEPO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.83, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for DEPOMED INC is currently very high, coming in at 96.30%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.38% trails the industry average.
  • DEPOMED INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DEPOMED INC swung to a loss, reporting -$0.54 versus $1.26 in the prior year. This year, the market expects an improvement in earnings (-$0.18 versus -$0.54).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, DEPOMED INC's return on equity significantly trails that of both the industry average and the S&P 500.

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