Perilous Reversal Stock: Illumina (ILMN)

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 Illumina ( ILMN) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Illumina as such a stock due to the following factors:

  • ILMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $166.9 million.
  • ILMN has traded 853,361 shares today.
  • ILMN is down 3.1% today.
  • ILMN was up 5.2% yesterday.

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More details on ILMN:

Illumina, Inc. develops, manufactures, and markets life science tools and integrated systems for the analysis of genetic variation and function in North America, Europe, Latin America, the Asia-Pacific, the Middle East, and South Africa. ILMN has a PE ratio of 105.4. Currently there are 9 analysts that rate Illumina a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Illumina has been 1.4 million shares per day over the past 30 days. Illumina has a market cap of $22.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.84 and a short float of 18.3% with 4.47 days to cover. Shares are up 43.9% year-to-date as of the close of trading on Friday.

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 Illumina as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • ILMN's revenue growth has slightly outpaced the industry average of 21.8%. Since the same quarter one year prior, revenues rose by 29.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, ILLUMINA INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Life Sciences Tools & Services industry. The net income increased by 29.9% when compared to the same quarter one year prior, rising from $35.88 million to $46.61 million.
  • Net operating cash flow has significantly increased by 100.92% to $178.03 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 71.19%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 102.64% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.

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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