EHealth (EHTH) Is Today's Dead Cat Bounce Stock

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 eHealth ( EHTH) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified eHealth as such a stock due to the following factors:

  • EHTH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.5 million.
  • EHTH has traded 161,417 shares today.
  • EHTH is up 3.4% today.
  • EHTH was down 13.1% yesterday.

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More details on EHTH:

eHealth, Inc. provides online health insurance services for individuals, families, and small businesses in the United States. Currently there are 6 analysts that rate eHealth a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for eHealth has been 292,400 shares per day over the past 30 days. eHealth has a market cap of $741.9 million and is part of the financial sector and insurance industry. The stock has a beta of 0.76 and a short float of 11.2% with 4.22 days to cover. Shares are down 27.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates eHealth as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 17.9%. 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.
  • Compared to its closing price of one year ago, EHTH's share price has jumped by 49.48%, exceeding the performance of the broader market during that same time frame. Although EHTH had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The gross profit margin for EHEALTH INC is currently very high, coming in at 97.81%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.04% is in-line with the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market, EHEALTH INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$5.41 million or 905.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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