Editor's Note: 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.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- WLP's revenue growth trails the industry average of 25.9%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WLP has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- WELLPOINT INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, WELLPOINT INC increased its bottom line by earning $7.19 versus $6.91 in the prior year. This year, the market expects an improvement in earnings ($7.36 versus $7.19).
- The gross profit margin for WELLPOINT INC is rather low; currently it is at 21.80%. Regardless of WLP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WLP's net profit margin of 4.20% compares favorably to the industry average.
WellPoint, Inc., through its subsidiaries, operates as a health benefits company in the United States. The company offers various network-based managed care plans to large and small employer, individual, Medicaid, and senior markets. The company has a P/E ratio of 7.8, equal to the average health services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. WellPoint has a market cap of $18.68 billion and is part of the
industry. Shares are down 13.6% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.