Today's Dead Cat Bounce Stock: Adeptus Health (ADPT)

Trade-Ideas LLC identified Adeptus Health (ADPT) as a "dead cat bounce" (down big yesterday but up big today) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Adeptus Health

(

ADPT

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Adeptus Health as such a stock due to the following factors:

  • ADPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.6 million.
  • ADPT has traded 98,655 shares today.
  • ADPT is up 3.7% today.
  • ADPT was down 7.5% yesterday.

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More details on ADPT:

Adeptus Health Inc. owns and operates a network of independent freestanding emergency rooms in the United States. As of December 31, 2014, it operated 55 facilities located in the Houston, Dallas/Fort Worth, San Antonio, Austin, Colorado Springs, Denver, and Phoenix. ADPT has a PE ratio of 58. Currently there are 7 analysts that rate Adeptus Health a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Adeptus Health has been 478,400 shares per day over the past 30 days. Adeptus Health has a market cap of $899.5 million and is part of the health care sector and health services industry. The stock has a beta of 0.83 and a short float of 67.6% with 7.68 days to cover. Shares are up 56.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Adeptus Health as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including premium valuation, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • ADPT's very impressive revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues leaped by 53.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ADEPTUS HEALTH INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.25 versus -$0.17).
  • Currently the debt-to-equity ratio of 1.77 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, ADPT has managed to keep a strong quick ratio of 2.20, which demonstrates the ability to cover short-term cash needs.

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