Strong And Under The Radar: Bright Horizons Family Solutions (BFAM)

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 Bright Horizons Family Solutions ( BFAM) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Bright Horizons Family Solutions as such a stock due to the following factors:

  • BFAM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • BFAM is making at least a new 3-day high.
  • BFAM has a PE ratio of 35.1.
  • BFAM is mentioned 0.13 times per day on StockTwits.
  • BFAM has not yet been mentioned on StockTwits today.
  • BFAM is currently in the upper 20% of its 1-year range.
  • BFAM is in the upper 35% of its 20-day range.
  • BFAM is in the upper 45% of its 5-day range.
  • BFAM is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on BFAM:

Bright Horizons Family Solutions Inc. provides child care and early education, and other services for employers and families. It operates through three segments: Full-Service Center-Based Child Care, Back-Up Dependent Care, and Other Educational Advisory Services. BFAM has a PE ratio of 35.1. Currently there are 6 analysts that rate Bright Horizons Family Solutions a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Bright Horizons Family Solutions has been 119,700 shares per day over the past 30 days. Bright Horizons Family has a market cap of $2.8 billion and is part of the services sector and diversified services industry. Shares are up 13.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bright Horizons Family Solutions as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • BFAM's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 12.0%. 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.
  • Net operating cash flow has increased to $52.73 million or 14.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.80%.
  • In comparison to the other companies in the Diversified Consumer Services industry and the overall market, BRIGHT HORIZONS FAMILY SOLTN's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Consumer Services industry average. The net income has decreased by 11.7% when compared to the same quarter one year ago, dropping from $24.58 million to $21.71 million.
  • The gross profit margin for BRIGHT HORIZONS FAMILY SOLTN is currently lower than what is desirable, coming in at 27.31%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.23% significantly trails the industry average.

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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