Trade-Ideas LLC identified

Valeant Pharmaceuticals International

(

VRX

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

  • VRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $452.0 million.
  • VRX has traded 341,606 shares today.
  • VRX is up 3.7% today.
  • VRX was down 7.6% yesterday.

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More details on VRX:

Valeant Pharmaceuticals International, Inc. develops, manufactures, and markets pharmaceuticals, over-the-counter products, and medical devices worldwide. Currently there are 4 analysts that rate Valeant Pharmaceuticals International a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Valeant Pharmaceuticals International has been 33.0 million shares per day over the past 30 days. Valeant Pharmaceuticals International has a market cap of $7.6 billion and is part of the health care sector and drugs industry. The stock has a beta of -1.03 and a short float of 10.2% with 1.40 days to cover. Shares are down 80.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Valeant Pharmaceuticals International as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, 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 Pharmaceuticals industry. The net income has significantly decreased by 482.5% when compared to the same quarter one year ago, falling from $97.70 million to -$373.70 million.
  • The debt-to-equity ratio is very high at 5.65 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, VRX maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
  • 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 Pharmaceuticals industry and the overall market, VALEANT PHARMACEUTICALS INTL's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 90.47%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 485.71% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • VALEANT PHARMACEUTICALS INTL 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, VALEANT PHARMACEUTICALS INTL swung to a loss, reporting -$0.86 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($6.69 versus -$0.86).

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