Rockwell Medical (RMTI) Is Today's Perilous Reversal 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 Rockwell Medical ( RMTI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Rockwell Medical as such a stock due to the following factors:

  • RMTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.8 million.
  • RMTI has traded 3.0 million shares today.
  • RMTI is down 3.8% today.
  • RMTI was up 11.3% yesterday.

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More details on RMTI:

Rockwell Medical, Inc. operates as an integrated biopharmaceutical company in the United States and internationally. It offers products and services for the treatment of end-stage renal disease, chronic kidney disease, iron deficiency, secondary hyperparathyroidism, and hemodialysis. Currently there are 3 analysts that rate Rockwell Medical a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Rockwell Medical has been 579,700 shares per day over the past 30 days. Rockwell Medical has a market cap of $751.5 million and is part of the health care sector and drugs industry. The stock has a beta of 1.51 and a short float of 24.3% with 10.33 days to cover. Shares are up 45.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rockwell Medical as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for ROCKWELL MEDICAL INC is rather low; currently it is at 18.16%. Regardless of RMTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RMTI's net profit margin of -26.64% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ROCKWELL MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 68.02% to -$3.31 million when compared to the same quarter last year. In addition, ROCKWELL MEDICAL INC has also vastly surpassed the industry average cash flow growth rate of 5.81%.
  • This stock has increased by 26.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in RMTI do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • ROCKWELL MEDICAL INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, ROCKWELL MEDICAL INC continued to lose money by earning -$0.52 versus -$1.65 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.52).

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