Trade-Ideas: Health Net (HNT) Is Today's New Lifetime High 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 Health Net ( HNT) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Health Net as such a stock due to the following factors:

  • HNT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.2 million.
  • HNT has traded 5,408 shares today.
  • HNT is trading at a new lifetime high.

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More details on HNT:

Health Net, Inc. provides managed health care services through health plans and government-sponsored managed care plans in the United States. It operates through Western Region Operations and Government Contracts segments. HNT has a PE ratio of 34. Currently there are 3 analysts that rate Health Net a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Health Net has been 562,200 shares per day over the past 30 days. Health Net has a market cap of $4.8 billion and is part of the health care sector and health services industry. The stock has a beta of 0.38 and a short float of 4.1% with 6.04 days to cover. Shares are up 14.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Health Net as a buy. 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, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.1%. Since the same quarter one year prior, revenues rose by 28.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 176.31% to $860.62 million when compared to the same quarter last year. In addition, HEALTH NET INC has also vastly surpassed the industry average cash flow growth rate of 0.85%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 56.23% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • HEALTH NET INC has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTH NET INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $1.80).

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