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Henry Schein (HSIC) Marked As Today's Roof Leaker Stock

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 "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) 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 $54.2 million.
  • HSIC has traded 275,546 shares today.
  • HSIC is trading at 1.63 times the normal volume for the stock at this time of day.
  • HSIC crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in HSIC with the Ticky from Trade-Ideas. See the FREE profile for HSIC NOW at Trade-Ideas

More details on HSIC:

Henry Schein, Inc. distributes health care products and services worldwide. It operates in two segments, Health Care Distribution, and Technology and Value-Added Services. HSIC has a PE ratio of 23.1. 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 415,100 shares per day over the past 30 days. Henry Schein has a market cap of $10.0 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.98 and a short float of 3.6% with 7.25 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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 increase in stock price during the past year, growth in earnings per share, increase in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SCHEIN (HENRY) INC has improved earnings per share by 14.6% 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 $4.92 versus $4.31 in the prior year. This year, the market expects an improvement in earnings ($5.37 versus $4.92).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income increased by 11.6% when compared to the same quarter one year prior, going from $91.48 million to $102.10 million.
  • HSIC's revenue growth trails the industry average of 21.2%. Since the same quarter one year prior, revenues slightly increased by 6.0%. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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