Lannett (LCI) Showing Signs Of Perilous Reversal 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 Lannett ( LCI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lannett as such a stock due to the following factors:

  • LCI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.3 million.
  • LCI has traded 51,051 shares today.
  • LCI is down 4% today.
  • LCI was up 6.6% yesterday.

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More details on LCI:

Lannett Company, Inc. develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States. It offers solid oral, extended release, topical, and oral solution finished dosage forms of drugs that address a range of therapeutic areas. LCI has a PE ratio of 35.5. Currently there are 4 analysts that rate Lannett a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Lannett has been 633,600 shares per day over the past 30 days. Lannett has a market cap of $1.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.82 and a short float of 4.4% with 4.15 days to cover. Shares are up 16.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lannett as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • LCI's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 105.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • LCI's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.91, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 350.00% and other important driving factors, this stock has surged by 197.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • LANNETT CO INC reported significant earnings per share improvement 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, LANNETT CO INC increased its bottom line by earning $0.46 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $0.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 482.6% when compared to the same quarter one year prior, rising from $3.95 million to $23.00 million.

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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