NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 33.0%. 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.
- Net operating cash flow has significantly increased by 122.54% to $7.75 million when compared to the same quarter last year. In addition, CAPITAL SENIOR LIVING CORP has also vastly surpassed the industry average cash flow growth rate of 18.18%.
- Compared to its closing price of one year ago, CSU's share price has jumped by 30.73%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The gross profit margin for CAPITAL SENIOR LIVING CORP is rather low; currently it is at 18.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.40% trails that of the industry average.
- 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 40.3% when compared to the same quarter one year ago, falling from $1.46 million to $0.87 million.
Capital Senior Living Corporation, together with its subsidiaries, operates senior living communities in the United States. The company provides senior living services to the elderly, including independent living, assisted living, skilled nursing, and home care services. The company has a P/E ratio of 37.5, equal to the average health services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Capital Senior Living has a market cap of $165.8 million and is part of the
industry. Shares are down 2.2% year to date as of the close of trading on Wednesday.
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