NEW YORK (TheStreet) -- Amedisys (AMED - Get Report) shares are shooting up 17.9% to $15.86 on Friday after the company previewed its second quarter earnings results.
The health care company projected a surprise profit of between 15 cents and 20 cents per share on revenue of $300 million to $305 million. Analyst had expected the company to break even for the quarter on revenue of $299.6 million.
The improved outlook rests on cost cutting measures the company has undertaken during the quarter.
Must Read: Warren Buffett's 25 Favorite Stocks
TheStreet Ratings team rates AMEDISYS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMEDISYS INC (AMED) 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 deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 563.5% when compared to the same quarter one year ago, falling from $2.68 million to -$12.42 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, AMEDISYS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$6.34 million or 119.56% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- AMEDISYS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AMEDISYS INC reported poor results of -$2.95 versus -$2.64 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$2.95).
- In its most recent trading session, AMED 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: AMED Ratings Report