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.

NEW YORK (

TheStreet

)

-- Providence Service Corporation

(Nasdaq:

PRSC

) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

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Highlights from the ratings report include:

  • 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 314.4% when compared to the same quarter one year prior, rising from $1.42 million to $5.88 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 3.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 290.90% and other important driving factors, this stock has surged by 113.88% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The gross profit margin for PROVIDENCE SERVICE CORP is currently extremely low, coming in at 9.88%. Regardless of PRSC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.04% trails the industry average.
  • Net operating cash flow has significantly decreased to $0.28 million or 96.52% 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 Providence Service Corporation provides and manages government sponsored social services and non-emergency transportation services. Providence Service has a market cap of $354.7 million and is part of the health care sector and health services industry. Shares are up 56% year to date as of the close of trading on Wednesday.

You can view the full

Providence Service Ratings Report

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