NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share.
Highlights from the ratings report include:
- 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 Diversified Consumer Services industry. The net income has significantly decreased by 27.3% when compared to the same quarter one year ago, falling from $47.90 million to $34.80 million.
- Net operating cash flow has significantly decreased to -$114.11 million or 245.36% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- EDUCATION MANAGEMENT CORP's earnings per share declined by 21.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EDUCATION MANAGEMENT CORP increased its bottom line by earning $1.65 versus $1.18 in the prior year. For the next year, the market is expecting a contraction of 7.9% in earnings ($1.52 versus $1.65).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, EDUCATION MANAGEMENT CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- 47.20% is the gross profit margin for EDUCATION MANAGEMENT CORP which we consider to be strong. Regardless of EDMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EDMC's net profit margin of 5.00% is significantly lower than the same period one year prior.
Education Management Corporation provides post-secondary education in North America. It offers campus-based and online instructions to enable students earn undergraduate and graduate degrees, including doctoral degrees and certain specialized non-degree diplomas in various disciplines. The company has a P/E ratio of 9.8, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Education Management has a market cap of $2.2 billion and is part of the
industry. Shares are down 8.1% year to date as of the close of trading on Tuesday.
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