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MModal Inc Stock Downgraded (MODL)

NEW YORK (TheStreet) -- MModal (Nasdaq:MODL) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 40.7% when compared to the same quarter one year ago, falling from $5.14 million to $3.05 million.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
  • MMODAL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, MMODAL INC increased its bottom line by earning $1.18 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus $1.18).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.7%. Since the same quarter one year prior, revenues slightly increased by 6.9%. 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.

MModal Inc. provides clinical documentation solutions for the healthcare industry primarily in the United States. Its clinical documentation solutions include clinical narrative capture services, Speech and Language Understanding technology, and clinical documentation workflow solutions. The company has a P/E ratio of 13.6, below the average computer software & services industry P/E ratio of 14.5 and below the S&P 500 P/E ratio of 17.7. MModal has a market cap of $810.8 million and is part of the technology sector and computer software & services industry. Shares are up 48% year to date as of the close of trading on Monday.

You can view the full MModal Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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