Trade-Ideas LLC identified

Sirona Dental Systems

(

SIRO

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Sirona Dental Systems as such a stock due to the following factors:

  • SIRO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $87.2 million.
  • SIRO has traded 571,052 shares today.
  • SIRO is trading at 1.60 times the normal volume for the stock at this time of day.
  • SIRO crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on SIRO:

Sirona Dental Systems, Inc. develops, manufactures, and markets dental equipment for dentists worldwide. It operates through four segments Dental CAD/CAM Systems, Imaging Systems, Treatment Centers, and Instruments. SIRO has a PE ratio of 26. Currently there are 4 analysts that rate Sirona Dental Systems a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Sirona Dental Systems has been 419,700 shares per day over the past 30 days. Sirona Dental Systems has a market cap of $5.5 billion and is part of the health care sector and health services industry. The stock has a beta of 0.79 and a short float of 5% with 2.68 days to cover. Shares are up 9.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sirona Dental Systems as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.81% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SIRO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SIRONA DENTAL SYSTEMS INC has improved earnings per share by 13.0% 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, SIRONA DENTAL SYSTEMS INC increased its bottom line by earning $3.13 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $3.13).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Equipment & Supplies industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $51.50 million to $58.80 million.
  • The revenue growth significantly trails the industry average of 34.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIRO's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SIRO has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.

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