Trade-Ideas LLC identified

Magellan Health

(

MGLN

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

  • MGLN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.5 million.
  • MGLN has traded 50,657 shares today.
  • MGLN is down 4.8% today.
  • MGLN was up 11.9% yesterday.

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More details on MGLN:

Magellan Health, Inc. engages in the healthcare management business in the United States. The company's Managed Healthcare Commercial segment offers managed behavioral healthcare services, as well as employee assistance programs services. MGLN has a PE ratio of 21. Currently there is 1 analyst that rates Magellan Health a buy, no analysts rate it a sell, and 3 rate it a hold.

TST Recommends

The average volume for Magellan Health has been 279,100 shares per day over the past 30 days. Magellan Health 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 0.46 and a short float of 3.3% with 1.88 days to cover. Shares are down 9.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Magellan Health as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • MGLN's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MGLN has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • MAGELLAN HEALTH INC's earnings per share declined by 5.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MAGELLAN HEALTH INC reported lower earnings of $2.92 versus $4.53 in the prior year. For the next year, the market is expecting a contraction of 40.8% in earnings ($1.73 versus $2.92).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Health Care Providers & Services industry average, but is greater than that of the S&P 500. The net income has decreased by 6.9% when compared to the same quarter one year ago, dropping from $4.99 million to $4.64 million.

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