NEW YORK (TheStreet) -- HealthStream Inc (HSTM - Get Report) shares are down -6.9% to $22.69 on heavy volume on Tuesday. By midday, 293,000 shares had been traded, surpassing the stock's three month daily average volume of 218,500 thousand shares.
The declinel follows the release of the company's first quarter earnings report after the closing bell on Monday.
The healthcare organization research and solutions provider posted revenue of $38.3 million in the first quarter, surpassing first quarter 2013's revenue by 29%, but falling short of analysts consensus estimates of $41.01 million.
Net income for the quarter was $1.9 million, or 7 cents per diluted share, missing analysts EPS estimates of 9 cents per diluted share.
TheStreet Ratings team rates HEALTHSTREAM INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HEALTHSTREAM INC (HSTM) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 31.8%. 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.
- HSTM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, HSTM has a quick ratio of 2.40, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- 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. When compared to other companies in the Health Care Technology industry and the overall market, HEALTHSTREAM INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $3.43 million or 50.39% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: HSTM Ratings Report