NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- PSSI, with its decline in revenue, underperformed when compared the industry average of 7.9%. Since the same quarter one year prior, revenues fell by 20.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- PSS WORLD MEDICAL INC's earnings per share declined by 28.0% 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, PSS WORLD MEDICAL INC increased its bottom line by earning $1.38 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 18.1% in earnings ($1.13 versus $1.38).
- The gross profit margin for PSS WORLD MEDICAL INC is currently lower than what is desirable, coming in at 33.30%. Regardless of PSSI'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 2.60% trails the industry average.
- 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 Health Care Providers & Services industry. The net income has decreased by 24.6% when compared to the same quarter one year ago, dropping from $14.19 million to $10.70 million.
- Net operating cash flow has decreased to $22.80 million or 34.54% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
PSS World Medical, Inc. provides medical products and supplies, diagnostic equipment, healthcare information technology, pharmaceutical products, and professional and consulting services in the United States. The company operates in two segments, Physician Business and Extended Care Business. The company has a P/E ratio of 15.7, equal to the average wholesale industry P/E ratio and below the S&P 500 P/E ratio of 17.7. PSS World Medical has a market cap of $1.09 billion and is part of the
industry. Shares are down 16% year to date as of the close of trading on Friday.
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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.