Mallinckrodt (MNK) Is Weak On High Volume 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.

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

  • MNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $104.3 million.
  • MNK has traded 376,227 shares today.
  • MNK is trading at 5.14 times the normal volume for the stock at this time of day.
  • MNK is trading at a new low 3.04% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in MNK with the Ticky from Trade-Ideas. See the FREE profile for MNK NOW at Trade-Ideas

More details on MNK:

Mallinckrodt public limited company develops, manufactures, markets, and distributes specialty pharmaceutical products and medical imaging agents worldwide. The company operates through two segments, Specialty Pharmaceuticals and Global Medical Imaging. Currently there are 8 analysts that rate Mallinckrodt a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Mallinckrodt has been 1.2 million shares per day over the past 30 days. Mallinckrodt has a market cap of $14.5 billion and is part of the health care sector and drugs industry. Shares are up 23.1% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Mallinckrodt 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 solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • MNK's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 63.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MNK has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for MALLINCKRODT PLC is currently very high, coming in at 70.72%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, MNK's net profit margin of 10.83% significantly trails the industry average.
  • MALLINCKRODT PLC reported significant earnings per share improvement 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, MALLINCKRODT PLC swung to a loss, reporting -$3.57 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($7.41 versus -$3.57).
  • 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, MALLINCKRODT PLC's return on equity significantly trails that of both the industry average and the S&P 500.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

If you liked this article you might like

Opioid Litigants Get Boost From Senate Report

Opioid Litigants Get Boost From Senate Report

Try This Pair of Biotech Trades

Try This Pair of Biotech Trades

GoPro, Alteryx, Charles River Labs, Mallinckrodt: 'Mad Money' Lightning Round

GoPro, Alteryx, Charles River Labs, Mallinckrodt: 'Mad Money' Lightning Round

Don't Get Caught on the Wrong Side: Cramer's 'Mad Money' Recap (Wed 11/15/17)

Don't Get Caught on the Wrong Side: Cramer's 'Mad Money' Recap (Wed 11/15/17)

Mallinckrodt Stock Lowered to 'Neutral' at UBS Over Persisting Concerns

Mallinckrodt Stock Lowered to 'Neutral' at UBS Over Persisting Concerns