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Today's Pre-Market Laggard Is Actavis (ACT)

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 Actavis ( ACT) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Actavis as such a stock due to the following factors:

  • ACT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $574.9 million.
  • ACT traded 10,001 shares today in the pre-market hours as of 8:10 AM.
  • ACT is down 2.8% today from Friday's close.

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More details on ACT:

Actavis plc, an integrated specialty pharmaceutical company, is engaged in the development, manufacture, marketing, sale, and distribution of pharmaceutical products in the Americas, Europe, the Middle East, Africa, Australia, and the Asia Pacific. Currently there are 16 analysts that rate Actavis a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Actavis has been 2.1 million shares per day over the past 30 days. Actavis has a market cap of $37.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.35 and a short float of 10.1% with 1.08 days to cover. Shares are up 29.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Actavis as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 40.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 169.62% and other important driving factors, this stock has surged by 59.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ACTAVIS PLC 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, ACTAVIS PLC swung to a loss, reporting -$5.43 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($13.62 versus -$5.43).
  • ACT's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ACT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.62 is low and demonstrates weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, ACTAVIS PLC's return on equity significantly trails that of both the industry average and the S&P 500.

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