NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- NOVA, with its decline in revenue, slightly underperformed the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 45.70% is the gross profit margin for NOVAMED INC which we consider to be strong. Regardless of NOVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NOVA's net profit margin of 5.40% compares favorably to the industry average.
- NOVAMED INC has improved earnings per share by 8.3% 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, NOVAMED INC reported lower earnings of $0.90 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.90).
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.62% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOVA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 15.3% when compared to the same quarter one year prior, going from $1.80 million to $2.07 million.
NovaMed, Inc., together with its subsidiaries, owns and operates ambulatory surgery centers (ASCs) in the United States. The company has a P/E ratio of 14.4, below the average diversified services industry P/E ratio of 19.4 and below the S&P 500 P/E ratio of 16.7. NovaMed has a market cap of $105.1 million and is part of the
industry. Shares are up 14.7% year to date as of the close of trading on Monday.
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