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 largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.
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Highlights from the ratings report include:
- HSKA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.42, which illustrates the ability to avoid short-term cash problems.
- 48.70% is the gross profit margin for HESKA CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HSKA's net profit margin of 3.00% significantly trails the industry average.
- HESKA CORP's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HESKA CORP turned its bottom line around by earning $0.40 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus $0.40).
- Net operating cash flow has significantly decreased to -$0.26 million or 68.87% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Pharmaceuticals industry. The net income has significantly decreased by 36.2% when compared to the same quarter one year ago, falling from $0.92 million to $0.58 million.
Heska Corporation develops, manufactures, markets, sells, and supports veterinary products for canine and feline companion animal health markets in the United States and internationally. The company has a P/E ratio of 35.4, above the average drugs industry P/E ratio of 32.3 and above the S&P 500 P/E ratio of 17.7. Heska has a market cap of $58.4 million and is part of the
industry. Shares are up 32.7% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.