Barbarian At The Gate: Wright Medical Group (WMGI)

Trade-Ideas LLC identified Wright Medical Group ( WMGI) 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 Wright Medical Group as such a stock due to the following factors:

  • WMGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.2 million.
  • WMGI has traded 509,944 shares today.
  • WMGI traded in a range 208% of the normal price range with a price range of $1.21.
  • WMGI traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 WMGI:

Wright Medical Group N.V., a medical device company, designs, manufactures, markets, and sells orthopedic products in the United States, Europe, and internationally. Currently there are 14 analysts that rate Wright Medical Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Wright Medical Group has been 1.1 million shares per day over the past 30 days. Wright Medical Group has a market cap of $1.9 billion and is part of the health care sector and health services industry. The stock has a beta of 0.47 and a short float of 12.9% with 8.38 days to cover. Shares are down 23.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Wright Medical Group as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • WMGI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.47%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Health Care Equipment & Supplies industry average, but is greater than that of the S&P 500. The net income increased by 3.5% when compared to the same quarter one year prior, going from -$49.75 million to -$47.99 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, WRIGHT MEDICAL GROUP NV's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for WRIGHT MEDICAL GROUP NV is currently very high, coming in at 84.68%. 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 -26.51% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 61.26% to -$9.78 million when compared to the same quarter last year. In addition, WRIGHT MEDICAL GROUP NV has also vastly surpassed the industry average cash flow growth rate of -16.74%.

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