NEW YORK ( TheStreet) -- Team Health Holdings (NYSE: TMH) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and weak operating cash flow. Highlights from the ratings report include:
- Compared to other companies in the Health Care Providers & Services industry and the overall market, TEAM HEALTH HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 22.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- Net operating cash flow has decreased to $43.66 million or 11.94% when compared to the same quarter last year. Despite a decrease in cash flow of 11.94%, TEAM HEALTH HOLDINGS INC is still significantly exceeding the industry average of -102.63%.
- The debt-to-equity ratio is very high at 24.14 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TMH maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet RatingsStaff