Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate MEDASSETS INC (MDAS) 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 revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 24.1%. Since the same quarter one year prior, revenues rose by 16.8%. 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.
- The gross profit margin for MEDASSETS INC is currently very high, coming in at 74.56%. Regardless of MDAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDAS's net profit margin of -21.29% significantly underperformed when compared to the industry average.
- MEDASSETS 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MEDASSETS INC swung to a loss, reporting -$0.35 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus -$0.35).
- Currently the debt-to-equity ratio of 1.99 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, MDAS has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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 Technology industry and the overall market, MEDASSETS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: MDAS Ratings Report