Barbarian At The Gate: Envision Healthcare Holdings (EVHC)

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 Envision Healthcare Holdings ( EVHC) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Envision Healthcare Holdings as such a stock due to the following factors:

  • EVHC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.3 million.
  • EVHC has traded 333,848 shares today.
  • EVHC traded in a range 217.3% of the normal price range with a price range of $1.29.
  • EVHC traded above its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on EVHC:

Envision Healthcare Holdings, Inc. provides physician-led, outsourced medical services to consumers, hospitals, healthcare systems, health plans, and government entities in the United States. EVHC has a PE ratio of 55. Currently there are 12 analysts that rate Envision Healthcare Holdings a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Envision Healthcare Holdings has been 1.8 million shares per day over the past 30 days. Envision Healthcare has a market cap of $7.1 billion and is part of the health care sector and health services industry. Shares are up 10.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Envision Healthcare Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • EVHC's revenue growth has slightly outpaced the industry average of 13.0%. Since the same quarter one year prior, revenues rose by 22.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ENVISION HEALTHCARE HLDGS has improved earnings per share by 30.8% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ENVISION HEALTHCARE HLDGS increased its bottom line by earning $0.66 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $0.66).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, EVHC has managed to keep a strong quick ratio of 1.88, which demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ENVISION HEALTHCARE HLDGS is currently extremely low, coming in at 12.02%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 2.68% is above that of the industry average.

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