Barbarian At The Gate: Sirona Dental Systems (SIRO)

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 "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 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 $29.6 million.
  • SIRO has traded 53,516 shares today.
  • SIRO traded in a range 284.2% of the normal price range with a price range of $3.56.
  • SIRO traded above its daily resistance level (quality: 24 days, meaning that the stock is crossing a resistance level set by the last 24 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 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 28.0. Currently there are 6 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 397,000 shares per day over the past 30 days. Sirona Dental Systems has a market cap of $4.6 billion and is part of the health care sector and health services industry. The stock has a beta of 1.33 and a short float of 7.3% with 12.59 days to cover. Shares are up 12.7% year-to-date as of the close of trading on Thursday.

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 Sirona Dental Systems as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SIRONA DENTAL SYSTEMS INC has improved earnings per share by 17.9% in the most recent quarter compared to the same quarter a year ago. 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 ($3.65 versus $2.61).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Equipment & Supplies industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $31.66 million to $37.33 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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 0.06 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 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.

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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