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Why MedAssets (MDAS) Is Spiking Today

Stocks in this article: MDAS

NEW YORK (TheStreet) -- MedAssets  (MDAS) was rising 13.82% to $25.12 on Thursday after the company reported its fourth-quarter results and issued guidance for the fiscal year 2014.

The company, which provides clinical resource management and revenue cycle management solutions for the health-care industry, reported earnings per share of 30 cents for the quarter. Revenue increased 4% year over year to $170.5 million thanks to a 7% increase in its clinical resource management segment and a 1% decrease in its revenue cycle management segment. Analysts' consensus estimate called for 28 cents a share on revenue of $165.7 million.

MedAssets forecast revenue growth of 2.9% to 4.9% to a range of $700 million to $714 million. The company also expects earnings per share of $1.33 to $1.43. These figures are in line with the consensus estimate.

Finally, the company's board of directors announced a plan to repurchase $75 million of its own shares during the next 12 months.

Must Read: MedAssets Announces Share Repurchase Plan

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TheStreet Ratings team rates MEDASSETS INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MEDASSETS INC (MDAS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MEDASSETS INC has improved earnings per share by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MEDASSETS INC continued to lose money by earning -$0.12 versus -$0.27 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus -$0.12).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Technology industry average. The net income increased by 26.3% when compared to the same quarter one year prior, rising from $5.46 million to $6.90 million.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Currently the debt-to-equity ratio of 1.68 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.42, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Technology industry and the overall market on the basis of return on equity, MEDASSETS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: MDAS Ratings Report

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