NEW YORK (
-- Universal American Financial Corporation
) 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 and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, UNIVERSAL AMERICAN CORP's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$276.21 million or 75.87% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- UAM, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues fell by 17.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- UAM's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
Universal American Corp., together with its subsidiaries, provides health insurance and managed care products and services primarily to the senior population in the United States. The company has a P/E ratio of 4.9, equal to the average health services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Universal American Financial has a market cap of $749.5 million and is part of the
industry. Shares are down 54.3% year to date as of the close of trading on Tuesday.
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