NEW YORK ( TheStreet) -- LHC Group (Nasdaq: LHCG) has been upgraded by TheStreet Ratings from sell 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 expanding profit margins. 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:
- LHCG's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LHCG has a quick ratio of 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
- 43.90% is the gross profit margin for LHC GROUP INC which we consider to be strong. Regardless of LHCG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LHCG's net profit margin of -24.70% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to -$49.41 million or 390.59% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Providers & Services industry and the overall market, LHC GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff