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Why Natus Medical (BABY) Stock Is Soaring Today

Stocks in this article: BABY

NEW YORK (TheStreet) -- Shares of Natus Medical Inc.  (BABY) are surging, up 6.60% to $26.00, after the healthcare products company reported financial results for the 2014 first quarter ending March 31.

Revenue was $85.6 million, compared to $85.8 million in the first quarter of 2013.

Net income was $6.3 million, or $0.19 per diluted share, compared with net income of $3.4 million, or $0.11 per diluted share, in the first quarter of last year.

Natus said it reported record first quarter non-GAAP earnings per share of $0.26 per diluted share, up 73% from the $0.15 per diluted share reported for the first quarter of 2013.

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TheStreet Ratings team rates NATUS MEDICAL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate NATUS MEDICAL INC (BABY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • NATUS MEDICAL INC reported significant earnings per share improvement 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. During the past fiscal year, NATUS MEDICAL INC increased its bottom line by earning $0.73 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 82.0% when compared to the same quarter one year prior, rising from $5.02 million to $9.13 million.
  • BABY's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BABY has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 567.30% to $16.08 million when compared to the same quarter last year. In addition, NATUS MEDICAL INC has also vastly surpassed the industry average cash flow growth rate of 7.34%.
  • The gross profit margin for NATUS MEDICAL INC is rather high; currently it is at 62.19%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.07% trails the industry average.
  • You can view the full analysis from the report here: BABY Ratings Report
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