Cempra (CEMP) Reaches New Lifetime High 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 Cempra ( CEMP) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Cempra as such a stock due to the following factors:

  • CEMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.2 million.
  • CEMP has traded 23,624 shares today.
  • CEMP is trading at a new lifetime high.

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More details on CEMP:

Cempra, Inc., a clinical-stage pharmaceutical company, focuses on developing antibiotics to meet critical medical needs in the treatment of bacterial infectious diseases in North America. Currently there are 6 analysts that rate Cempra a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cempra has been 316,400 shares per day over the past 30 days. Cempra has a market cap of $491.3 million and is part of the health care sector and drugs industry. The stock has a beta of 1.29 and a short float of 12% with 4.87 days to cover. Shares are up 10.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cempra as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, CEMPRA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CEMPRA INC has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CEMPRA INC reported poor results of -$1.50 versus -$1.11 in the prior year. For the next year, the market is expecting a contraction of 23.0% in earnings (-$1.85 versus -$1.50).
  • The stock price has risen over the past year, but it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 5.11, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 16.8% when compared to the same quarter one year prior, going from -$13.65 million to -$11.36 million.


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