Cyberonics (CYBX) Is Today's Perilous Reversal Stock - TheStreet

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

Cyberonics

(

CYBX

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cyberonics as such a stock due to the following factors:

  • CYBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.1 million.
  • CYBX has traded 177,123 shares today.
  • CYBX is down 3.5% today.
  • CYBX was up 13.4% yesterday.

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More details on CYBX:

Cyberonics, Inc., together with its subsidiaries, designs, develops, markets, and sells implantable medical devices to hospitals and ambulatory surgery centers. CYBX has a PE ratio of 22.1. Currently there are 6 analysts that rate Cyberonics a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cyberonics has been 337,500 shares per day over the past 30 days. Cyberonics has a market cap of $1.3 billion and is part of the health care sector and health services industry. The stock has a beta of 0.58 and a short float of 6.4% with 2.82 days to cover. Shares are down 15.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cyberonics as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • CYBERONICS 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. We feel that this trend should continue. During the past fiscal year, CYBERONICS INC increased its bottom line by earning $2.00 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($2.33 versus $2.00).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 55.9% when compared to the same quarter one year prior, rising from $8.67 million to $13.52 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 4.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CYBX 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 7.50, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Equipment & Supplies industry and the overall market, CYBERONICS INC's return on equity exceeds that of both the industry average and the S&P 500.

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