Stock To Watch: Merit Medical Systems (MMSI) In Perilous Reversal

Trade-Ideas LLC identified Merit Medical Systems ( MMSI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Merit Medical Systems as such a stock due to the following factors:

  • MMSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.5 million.
  • MMSI has traded 52,925 shares today.
  • MMSI is down 3.2% today.
  • MMSI was up 7.7% yesterday.

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More details on MMSI:

Merit Medical Systems, Inc. designs, develops, manufactures, and markets medical devices for interventional and diagnostic procedures worldwide. MMSI has a PE ratio of 28. Currently there are 2 analysts that rate Merit Medical Systems a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Merit Medical Systems has been 399,100 shares per day over the past 30 days. Merit Medical Systems has a market cap of $791.0 million and is part of the health care sector and health services industry. The stock has a beta of 1.94 and a short float of 5.2% with 2.21 days to cover. Shares are up 3.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Merit Medical Systems 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, solid stock price performance, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth significantly trails the industry average of 35.9%. Since the same quarter one year prior, revenues slightly increased by 5.7%. 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 current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
  • Compared to its closing price of one year ago, MMSI's share price has jumped by 88.57%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • MERIT MEDICAL SYSTEMS INC's earnings per share declined by 38.9% in the most recent quarter compared to the same quarter a year ago. 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, MERIT MEDICAL SYSTEMS INC increased its bottom line by earning $0.54 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.54).
  • 43.51% is the gross profit margin for MERIT MEDICAL SYSTEMS INC which we consider to be strong. Regardless of MMSI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.54% trails the industry average.

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