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 or Stephanie Link.
Trade-Ideas LLC identified Valeant Pharmaceuticals International ( VRX) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Valeant Pharmaceuticals International as such a stock due to the following factors:
- VRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $247.5 million.
- VRX traded 12,751 shares today in the pre-market hours as of 8:54 AM.
- VRX is down 4.2% today from yesterday's close.
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More details on VRX:
Valeant Pharmaceuticals International, Inc. develops, manufactures, and markets pharmaceuticals, over-the-counter (OTC) products, and medical devices in the areas of eye health, dermatology, and neurology therapeutic classes worldwide. Currently there are 9 analysts that rate Valeant Pharmaceuticals International a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Valeant Pharmaceuticals International has been 3.1 million shares per day over the past 30 days. Valeant Pharmaceuticals International has a market cap of $41.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.12 and a short float of 5.5% with 9.49 days to cover. Shares are up 5.4% year-to-date as of the close of trading on Tuesday.
TheStreetRatings.com Analysis:
TheStreet Quant Ratings rates Valeant Pharmaceuticals International as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.
Highlights from the ratings report include:
- VRX's very impressive revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues leaped by 76.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 36.16% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for VALEANT PHARMACEUTICALS INTL is currently very high, coming in at 74.95%. Regardless of VRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRX's net profit margin of -1.19% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 3.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, VRX maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, VALEANT PHARMACEUTICALS INTL's return on equity significantly trails that of both the industry average and the S&P 500.