Weak On High Volume: Medicines Company (MDCO)

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 Medicines Company ( MDCO) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Medicines Company as such a stock due to the following factors:

  • MDCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.0 million.
  • MDCO has traded 64,213 shares today.
  • MDCO is trading at 2.27 times the normal volume for the stock at this time of day.
  • MDCO is trading at a new low 3.11% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on MDCO:

The Medicines Company provides medical solutions for patients in acute and intensive care hospitals worldwide. Currently there is 1 analyst that rates Medicines Company a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Medicines Company has been 828,200 shares per day over the past 30 days. Medicines has a market cap of $1.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.53 and a short float of 12.9% with 7.39 days to cover. Shares are down 27.6% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Medicines Company as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • MDCO's debt-to-equity ratio is very low at 0.27 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 3.24, which clearly demonstrates the ability to cover short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.8%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for MEDICINES CO is rather high; currently it is at 65.16%. Regardless of MDCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDCO's net profit margin of -9.70% significantly underperformed when compared to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, MEDICINES CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $2.70 million or 95.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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