NEW YORK (TheStreet) -- Veterinary products company Heska (HSKA - Get Report) surged more than 25% to a one-year high of $11.20 as of 2:30 p.m. on Thursday after the company reported its fourth-quarter results.
Consolidated revenue increased 27.4% year over year to a record $23.5 million from $18.5 million. Net income rose to $1.2 million, or 20 cents a share, from $389,000, or 7 cents a share, in the same period one year earlier.
Gross profit increased year over year to $10.4 million from $7.4 million, while gross margin widened to 44.3% from 40.1% in the fourth quarter of 2012. Heska posted a record operating income of $2.8 million, up from $720,000 in the same period one year ago.
"This was a tremendous conclusion to a solid year of transformation, providing momentum as we enter 2014 and demonstrating the progress we have made in the last year to strategically reposition Heska," said Dr. Robert, Heska's Chairman and CEO.
TheStreet Ratings team rates HESKA CORP as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HESKA CORP (HSKA) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, HESKA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- HESKA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HESKA CORP reported lower earnings of $0.22 versus $0.40 in the prior year. For the next year, the market is expecting a contraction of 272.7% in earnings (-$0.38 versus $0.22).
- In its most recent trading session, HSKA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- HSKA's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.75 is somewhat weak and could be cause for future problems.
- 45.65% is the gross profit margin for HESKA CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HSKA's net profit margin of 1.36% significantly trails the industry average.
- You can view the full analysis from the report here: HSKA Ratings Report