Watch Out: Barbarians At The Gate For Humana (HUM)
Trade-Ideas LLC identified
(
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Humana as such a stock due to the following factors:
- HUM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $155.0 million.
- HUM has traded 1.2 million shares today.
- HUM traded in a range 216.5% of the normal price range with a price range of $7.70.
- HUM traded above its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on HUM:
Humana Inc., together with its subsidiaries, operates as a health and well-being company. The company operates through three segments: Retail, Group, and Healthcare Services. The stock currently has a dividend yield of 0.7%. HUM has a PE ratio of 23. Currently there are 6 analysts that rate Humana a buy, no analysts rate it a sell, and 9 rate it a hold.
The average volume for Humana has been 838,600 shares per day over the past 30 days. Humana has a market cap of $24.7 billion and is part of the health care sector and health services industry. The stock has a beta of 0.86 and a short float of 1.6% with 2.66 days to cover. Shares are down 7.4% year-to-date as of the close of trading on Friday.
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Analysis:
rates Humana as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 350.46% to $482.00 million when compared to the same quarter last year. In addition, HUMANA INC has also vastly surpassed the industry average cash flow growth rate of 19.35%.
- HUMANA INC's earnings per share declined by 44.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HUMANA INC increased its bottom line by earning $8.43 versus $7.33 in the prior year. This year, the market expects an improvement in earnings ($8.85 versus $8.43).
- HUM, with its decline in revenue, slightly underperformed the industry average of 8.8%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- After a year of stock price fluctuations, the net result is that HUM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- You can view the full Humana Ratings Report.
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