Rating Change #8

Kensey Nash Corporation ( KNSY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 18.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $7.76 million or 8.02% when compared to the same quarter last year. In addition, KENSEY NASH CORP has also modestly surpassed the industry average cash flow growth rate of 3.78%.
  • Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.27 is very high and demonstrates very strong liquidity.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, KENSEY NASH CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 36.58% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

Kensey Nash Corporation, a medical device company, engages in the field of regenerative medicine products and technologies to help repair damaged or diseased tissues. The company has a P/E ratio of 247.5, below the average health services industry P/E ratio of 660 and above the S&P 500 P/E ratio of 17.7. Kensey Nash has a market cap of $171.2 million and is part of the health care sector and health services industry. Shares are down 29.3% year to date as of the close of trading on Thursday.

You can view the full Kensey Nash Ratings Report or get investment ideas from our investment research center.

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