Sangamo BioSciences (SGMO) Is Today's Perilous Reversal 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.
Trade-Ideas LLC identified
(
) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sangamo BioSciences as such a stock due to the following factors:
- SGMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.
- SGMO has traded 396,076 shares today.
- SGMO is down 3.1% today.
- SGMO was up 11% yesterday.
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More details on SGMO:
Sangamo BioSciences, Inc., a clinical stage biopharmaceutical company, focuses on the research, development, and commercialization of engineered DNA-binding proteins as novel therapeutic products for unmet medical needs in the United States. Currently there are 5 analysts that rate Sangamo BioSciences a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Sangamo BioSciences has been 929,700 shares per day over the past 30 days. Sangamo BioSciences has a market cap of $1.2 billion and is part of the health care sector and drugs industry. Shares are up 21.9% year-to-date as of the close of trading on Thursday.
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Analysis:
rates Sangamo BioSciences as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- SGMO's very impressive revenue growth greatly exceeded the industry average of 36.4%. Since the same quarter one year prior, revenues leaped by 117.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SGMO 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 9.10, which clearly demonstrates the ability to cover short-term cash needs.
- SANGAMO BIOSCIENCES INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SANGAMO BIOSCIENCES INC continued to lose money by earning -$0.39 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 48.7% in earnings (-$0.58 versus -$0.39).
- SGMO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.61%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Net operating cash flow has significantly decreased to -$2.71 million or 63.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Sangamo BioSciences Ratings Report.
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