HMS Holdings Corporation (HMSY) Marked As A Barbarian At The Gate

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 HMS Holdings Corporation ( HMSY) 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 HMS Holdings Corporation as such a stock due to the following factors:

  • HMSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.4 million.
  • HMSY has traded 152,626 shares today.
  • HMSY traded in a range 513.1% of the normal price range with a price range of $3.06.
  • HMSY traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 HMSY:

HMS Holdings Corp. provides cost containment services to government and private healthcare payers and sponsors. The company's services include co-ordination of benefits and program integrity services. HMSY has a PE ratio of 35.9. Currently there are 5 analysts that rate HMS Holdings Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for HMS Holdings Corporation has been 647,500 shares per day over the past 30 days. HMS has a market cap of $1.7 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.28 and a short float of 11.3% with 7.52 days to cover. Shares are down 25.1% year to date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HMS Holdings Corporation as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 4.8%. 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.
  • HMSY's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.69 is very high and demonstrates very strong liquidity.
  • 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 Health Care Technology industry. The net income has decreased by 19.7% when compared to the same quarter one year ago, dropping from $12.98 million to $10.42 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Health Care Technology industry and the overall market, HMS HOLDINGS CORP's return on equity is below that of both the industry average and the S&P 500.

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