Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Express Scripts ( ESRX) 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 Express Scripts as such a stock due to the following factors:
- ESRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $226.2 million.
- ESRX has traded 3.6 million shares today.
- ESRX is trading at 13.47 times the normal volume for the stock at this time of day.
- ESRX 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in ESRX with the Ticky from Trade-Ideas. See the FREE profile for ESRX NOW at Trade-Ideas More details on ESRX: Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services primarily in the United States and Canada. It offers healthcare management and administration services on behalf of its clients. ESRX has a PE ratio of 26.7. Currently there are 12 analysts that rate Express Scripts a buy, no analysts rate it a sell, and 3 rate it a hold. The average volume for Express Scripts has been 4.3 million shares per day over the past 30 days. Express Scripts has a market cap of $49.6 billion and is part of the health care sector and health services industry. The stock has a beta of 1.57 and a short float of 1.4% with 3.14 days to cover. Shares are up 12.9% year to date as of the close of trading on Friday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Express Scripts as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 263.0% when compared to the same quarter one year prior, rising from $149.60 million to $543.00 million.
- EXPRESS SCRIPTS HOLDING CO reported significant earnings per share improvement 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, EXPRESS SCRIPTS HOLDING CO reported lower earnings of $1.84 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($4.31 versus $1.84).
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that ESRX's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
- ESRX, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, EXPRESS SCRIPTS HOLDING CO's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Express Scripts Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.