NewLink Genetics (NLNK) Highlighted As Today's Perilous Reversal Stock

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.

Trade-Ideas LLC identified NewLink Genetics ( NLNK) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified NewLink Genetics as such a stock due to the following factors:

  • NLNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.7 million.
  • NLNK has traded 70,955 shares today.
  • NLNK is down 3% today.
  • NLNK was up 7% yesterday.

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More details on NLNK:

NewLink Genetics Corporation, a biopharmaceutical company, focuses on discovering, developing, and commercializing immunotherapeutic products to enhance treatment options for patients with cancer. NLNK has a PE ratio of 14.2. Currently there are 3 analysts that rate NewLink Genetics a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for NewLink Genetics has been 582,800 shares per day over the past 30 days. NewLink has a market cap of $1.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.54 and a short float of 23.6% with 7.98 days to cover. Shares are up 18.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NewLink Genetics as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • NLNK's very impressive revenue growth greatly exceeded the industry average of 18.5%. Since the same quarter one year prior, revenues leaped by 11635.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NLNK's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • NEWLINK GENETICS CORP reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NEWLINK GENETICS CORP turned its bottom line around by earning $3.19 versus -$1.24 in the prior year. For the next year, the market is expecting a contraction of 171.5% in earnings (-$2.28 versus $3.19).
  • The gross profit margin for NEWLINK GENETICS CORP is currently lower than what is desirable, coming in at 32.78%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, NLNK's net profit margin of 28.54% is significantly lower than the industry average.

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