Strong And Under The Radar: Surgical Care Affiliates (SCAI)

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 Surgical Care Affiliates ( SCAI) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Surgical Care Affiliates as such a stock due to the following factors:

  • SCAI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.9 million.
  • SCAI is making at least a new 3-day high.
  • SCAI has a PE ratio of 45.
  • SCAI is mentioned 1.10 times per day on StockTwits.
  • SCAI has not yet been mentioned on StockTwits today.
  • SCAI is currently in the upper 20% of its 1-year range.
  • SCAI is in the upper 35% of its 20-day range.
  • SCAI is in the upper 45% of its 5-day range.
  • SCAI is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on SCAI:

Surgical Care Affiliates, Inc., together with its subsidiaries, owns and operates a network of multi-specialty ambulatory surgery centers (ASCs) and surgical hospitals in the United States. SCAI has a PE ratio of 45. Currently there are 3 analysts that rate Surgical Care Affiliates a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Surgical Care Affiliates has been 241,800 shares per day over the past 30 days. Surgical Care Affiliates has a market cap of $1.5 billion and is part of the health care sector and health services industry. Shares are up 15.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Surgical Care Affiliates as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, premium valuation, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • 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 Health Care Providers & Services industry. The net income has significantly decreased by 4017.1% when compared to the same quarter one year ago, falling from $0.23 million to -$9.17 million.
  • The gross profit margin for SURGICAL CARE AFFILIATES INC is rather low; currently it is at 22.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.91% trails that of the industry average.
  • Net operating cash flow has decreased to $38.63 million or 13.01% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio is very high at 3.31 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SCAI's quick ratio is somewhat strong at 1.14, demonstrating the ability to handle short-term liquidity needs.

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