Why Derma Sciences Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, wound care products company Derma Sciences (NASDAQ: DSCI  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Derma Sciences and see what CAPS investors are saying about the stock right now.

Derma Sciences facts

Headquarters (founded)

Princeton, N.J. (since 1984)

Market Cap

$162.3 million

Industry

Health care supplies

Trailing-12-Month Revenue

$69.1 million

Management

Chairman/CEO Edward Quilty
CFO John Yetter

Return on Equity (average, past 3 years)

(11.1%)

Cash/Debt

$15.6 million / $0

Competitors

ConvaTec
Covidien
Johnson & Johnson

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 55% of the 22 members who have rated Derma Sciences believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star zzlangerhans, succinctly summed up the Derma Sciences bear case for our community:

I've never been a believer in Derma so I'll fling myself onto this rising knife. There's no consistent upward trend in quarterly revenues and the company seems to be dragging their heels on a phase III trial of DSC127 . Could that be because the FDA wants an active comparator instead of placebo and the company knows they won't get stat sig in ulcer healing with that approach? Meanwhile, the dilution continues. As I've said before, I don't grudge Derma [$100M] in enterprise value. Above that I start getting skeptical.

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