Idexx Laboratories (IDXX) Shows Signs Of Being Water-Logged And Getting Wetter

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 Idexx Laboratories ( IDXX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Idexx Laboratories as such a stock due to the following factors:

  • IDXX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.4 million.
  • IDXX has traded 80,777 shares today.
  • IDXX traded in a range 216.2% of the normal price range with a price range of $4.12.
  • IDXX traded below its daily resistance level (quality: 156 days, meaning that the stock is crossing a resistance level set by the last 156 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on IDXX:

IDEXX Laboratories, Inc. develops, manufactures, and distributes products and services primarily for the companion animal veterinary, livestock and poultry, water testing, and dairy markets worldwide. IDXX has a PE ratio of 33.2. Currently there are 5 analysts that rate Idexx Laboratories a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Idexx Laboratories has been 375,900 shares per day over the past 30 days. Idexx has a market cap of $6.1 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.88 and a short float of 6.2% with 7.84 days to cover. Shares are up 15.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Idexx Laboratories as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, increase in net income and good cash flow from operations. 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:
  • IDXX's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • IDEXX LABS INC has improved earnings per share by 11.1% 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, IDEXX LABS INC increased its bottom line by earning $3.48 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($3.86 versus $3.48).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry average. The net income increased by 6.0% when compared to the same quarter one year prior, going from $53.99 million to $57.22 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, IDEXX LABS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $81.76 million or 3.08% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.87%.

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