Express Scripts (ESRX) On Momo Momentum Watch 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 Express Scripts ( ESRX) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Express Scripts as such a stock due to the following factors:

  • ESRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $399.9 million.
  • ESRX has a PE ratio of 32.
  • ESRX is currently in the upper 30% of its 1-year range.
  • ESRX is in the upper 25% of its 20-day range.
  • ESRX is in the upper 35% of its 5-day range.
  • ESRX is currently trading above yesterday's high.
  • ESRX has experienced a gap between today's open and yesterday's close of 0.8%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on ESRX:

Express Scripts Holding Company operates as a pharmacy benefit management (PBM) company in the United States and Canada. The company operates through two segments, PBM and Other Business Operations. ESRX has a PE ratio of 32. Currently there are 12 analysts that rate Express Scripts a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Express Scripts has been 4.2 million shares per day over the past 30 days. Express Scripts has a market cap of $65.3 billion and is part of the health care sector and health services industry. The stock has a beta of 0.73 and a short float of 11% with 18.27 days to cover. Shares are up 5.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Express Scripts as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • EXPRESS SCRIPTS HOLDING CO has improved earnings per share by 42.9% 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. We feel that this trend should continue. During the past fiscal year, EXPRESS SCRIPTS HOLDING CO increased its bottom line by earning $2.66 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($5.45 versus $2.66).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 34.4% when compared to the same quarter one year prior, rising from $328.30 million to $441.10 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Powered by its strong earnings growth of 42.85% and other important driving factors, this stock has surged by 31.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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