Envision Healthcare Holdings (EVHC) 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 Envision Healthcare Holdings ( EVHC) 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 Envision Healthcare Holdings as such a stock due to the following factors:

  • EVHC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.2 million.
  • EVHC has traded 1.1 million shares today.
  • EVHC traded in a range 217% of the normal price range with a price range of $1.79.
  • EVHC traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 EVHC:

Envision Healthcare Holdings, Inc. provides physician-led, outsourced medical services to consumers, hospitals, healthcare systems, health plans, and government entities in the United States. EVHC has a PE ratio of 279.3. Currently there are 12 analysts that rate Envision Healthcare Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Envision Healthcare Holdings has been 1.1 million shares per day over the past 30 days. Envision Healthcare has a market cap of $6.1 billion and is part of the health care sector and health services industry. Shares are down 5.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Envision Healthcare Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • EVHC's revenue growth has slightly outpaced the industry average of 19.4%. Since the same quarter one year prior, revenues rose by 20.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ENVISION HEALTHCARE HLDGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.17 versus $0.06).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The gross profit margin for ENVISION HEALTHCARE HLDGS is rather low; currently it is at 15.12%. Regardless of EVHC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EVHC's net profit margin of 4.58% compares favorably to the industry average.
  • The debt-to-equity ratio of 1.18 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, EVHC has managed to keep a strong quick ratio of 2.26, which demonstrates the ability to cover short-term cash needs.

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