TSC Ratings' Updates: Amedisys

The following ratings changes were generated on Friday, March 20.

We've downgraded Amedisys (AMED), which provides home health and hospice services, from buy to hold. Strengths include the company's robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a decline in price during the past year.

Revenue leaped by 75.3% since the same quarter last year, outpacing the industry average of 6.4% growth and helping boost earnings per share, which rose significantly compared with the year-ago quarter. We feel the company's two-year trend of positive EPS growth should continue in the coming year, suggesting the improvement of business performance. The company's 0.6 deb-to-equity ratio is low and below the industry average, implying successful management of debt levels, but its 0.9 quick ratio is somewhat weak and could be cause for future problems. ROE has improved slightly compared with the same quarter last year, which can be construed as a modest strength in the organization.

Shares tumbled 26.3% over the past year, but this decline was not as bad as the broader market's plunge during the same time frame. Naturally, the overall market trend is bound to be a significant factor, and 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.

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