Weak On High Volume: TherapeuticsMD (TXMD)

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

  • TXMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.7 million.
  • TXMD has traded 146,593 shares today.
  • TXMD is trading at 5.09 times the normal volume for the stock at this time of day.
  • TXMD is trading at a new low 3.03% 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 TXMD:

TherapeuticsMD, Inc., a U.S. women's healthcare product company, manufactures and distributes branded and generic prescription prenatal vitamins, as well as over-the-counter, vitamins, and cosmetics. Currently there are 4 analysts that rate TherapeuticsMD a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for TherapeuticsMD has been 1.4 million shares per day over the past 30 days. TherapeuticsMD 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 0.99 and a short float of 19.1% with 17.83 days to cover. Shares are up 71.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TherapeuticsMD as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • THERAPEUTICSMD INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, THERAPEUTICSMD INC reported poor results of -$0.35 versus -$0.22 in the prior year. For the next year, the market is expecting a contraction of 10.0% in earnings (-$0.39 versus -$0.35).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 127.5% when compared to the same quarter one year ago, falling from -$9.18 million to -$20.89 million.
  • 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, THERAPEUTICSMD INC'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 -$19.15 million or 119.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for THERAPEUTICSMD INC is currently very high, coming in at 76.67%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -466.90% is in-line with the industry average.

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