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 Perrigo Company ( PRGO) 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 Perrigo Company as such a stock due to the following factors:
- PRGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $138.8 million.
- PRGO has traded 880,057 shares today.
- PRGO is trading at 1.93 times the normal volume for the stock at this time of day.
- PRGO 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 PRGO with the Ticky from Trade-Ideas. See the FREE profile for PRGO NOW at Trade-Ideas More details on PRGO: Perrigo is buying Canam Care as of Jan 2012 for $36. The stock currently has a dividend yield of 0.2%. PRGO has a PE ratio of 32.8. Currently there are 11 analysts that rate Perrigo Company a buy, no analysts rate it a sell, and 5 rate it a hold. The average volume for Perrigo Company has been 1.1 million shares per day over the past 30 days. Perrigo has a market cap of $19.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.10 and a short float of 2.5% with 2.42 days to cover. Shares are down 2.5% year-to-date as of the close of trading on Wednesday. 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 Perrigo Company 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, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 10.9%. 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.
- 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. To add to this, PRGO has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- 43.25% is the gross profit margin for PERRIGO CO PLC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -8.79% is in-line with the industry average.
- Compared to its closing price of one year ago, PRGO's share price has jumped by 28.91%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- PERRIGO CO PLC 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. 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, PERRIGO CO PLC increased its bottom line by earning $4.67 versus $4.18 in the prior year. This year, the market expects an improvement in earnings ($6.64 versus $4.67).
- You can view the full Perrigo Company 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.