Trade-Ideas LLC identified Steris ( STE) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Steris as such a stock due to the following factors:

  • STE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.5 million.
  • STE has traded 1.1 million shares today.
  • STE is trading at 3.04 times the normal volume for the stock at this time of day.
  • STE crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on STE:

STERIS Corporation develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and procedural support products and services for healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide. The stock currently has a dividend yield of 1.5%. STE has a PE ratio of 31. Currently there are 2 analysts that rate Steris a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Steris has been 737,000 shares per day over the past 30 days. Steris has a market cap of $4.0 billion and is part of the health care sector and health services industry. The stock has a beta of 1.19 and a short float of 14% with 10.64 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Steris as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • STE's revenue growth trails the industry average of 35.9%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, 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, STE has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
  • STERIS CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, STERIS CORP increased its bottom line by earning $2.25 versus $2.17 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $2.25).
  • 46.99% is the gross profit margin for STERIS CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.52% trails the industry average.

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