The firm said it raised its rating on the company, which through its subsidiaries operates general acute care hospitals in non-urban communities, because it believes LifePoint is leveraged to healthcare reform and will deliver an annual earnings growth in the double digits.
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TheStreet Ratings team rates LIFEPOINT HOSPITALS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIFEPOINT HOSPITALS INC (LPNT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, increase in net income, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 16.7%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has 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 14.5% when compared to the same quarter one year prior, going from $32.40 million to $37.10 million.
- Net operating cash flow has increased to $108.60 million or 17.78% when compared to the same quarter last year. Despite an increase in cash flow, LIFEPOINT HOSPITALS INC's cash flow growth rate is still lower than the industry average growth rate of 37.10%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, LIFEPOINT HOSPITALS INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: LPNT Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.