Sirona Dental Systems (SIRO) Is Water-Logged And Getting Wetter Today

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 Sirona Dental Systems ( SIRO) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $142.7 million.
  • SIRO has traded 149,231 shares today.
  • SIRO traded in a range 227.7% of the normal price range with a price range of $4.47.
  • SIRO traded below its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on SIRO:

Sirona Dental Systems, Inc. develops, manufactures, and markets dental equipment for dentists worldwide. It operates in four segments: Dental CAD/CAM Systems, Imaging Systems, Treatment Centers, and Instruments. SIRO has a PE ratio of 26.8. Currently there are 7 analysts that rate Sirona Dental Systems a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Sirona Dental Systems has been 729,700 shares per day over the past 30 days. Sirona Dental Systems has a market cap of $3.9 billion and is part of the health care sector and health services industry. Shares are up 2.4% year-to-date as of the close of trading on Thursday.

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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 revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 12.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SIRO's debt-to-equity ratio is very low at 0.07 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 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SIRONA DENTAL SYSTEMS INC's earnings per share improvement from the most recent quarter was slightly positive. 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 $2.61 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($3.66 versus $2.61).
  • The net income growth from the same quarter one year ago has exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 4.3% when compared to the same quarter one year prior, going from $34.74 million to $36.24 million.
  • The gross profit margin for SIRONA DENTAL SYSTEMS INC is rather high; currently it is at 58.64%. Regardless of SIRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.00% trails the industry average.

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