Trade-Ideas LLC identified

Heartware International

(

HTWR

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

  • HTWR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.8 million.
  • HTWR has traded 64,160 shares today.
  • HTWR is down 3.2% today.
  • HTWR was up 6.7% yesterday.

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More details on HTWR:

HeartWare International, Inc., a medical device company, designs, develops, manufactures, and markets miniaturized implantable heart pumps or ventricular assist devices (VAD) for the treatment of advanced heart failure in the United States, Germany, and internationally. Currently there are 5 analysts that rate Heartware International a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Heartware International has been 701,400 shares per day over the past 30 days. Heartware International has a market cap of $810.2 million and is part of the health care sector and health services industry. The stock has a beta of 0.42 and a short float of 29.1% with 5.08 days to cover. Shares are down 32% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Heartware International as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 306.1% when compared to the same quarter one year ago, falling from -$7.37 million to -$29.93 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, HEARTWARE INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.71, which shows the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.73%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 302.32% compared to the year-earlier 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.
  • HEARTWARE INTERNATIONAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HEARTWARE INTERNATIONAL INC continued to lose money by earning -$1.15 versus -$3.68 in the prior year. For the next year, the market is expecting a contraction of 158.3% in earnings (-$2.97 versus -$1.15).

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