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NEW YORK (TheStreet) -- Diversicare Healthcare Services (DVCR) has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIVERSICARE HEALTHCARE SVCS (DVCR) 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, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 39.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 186.7% when compared to the same quarter one year prior, rising from -$4.78 million to $4.15 million.
- DIVERSICARE HEALTHCARE SVCS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DIVERSICARE HEALTHCARE SVCS reported poor results of -$1.11 versus -$0.71 in the prior year.
- The gross profit margin for DIVERSICARE HEALTHCARE SVCS is currently extremely low, coming in at 11.57%. Regardless of DVCR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DVCR's net profit margin of 4.59% compares favorably to the industry average.
- The debt-to-equity ratio is very high at 4.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, DVCR maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: DVCR Ratings Report