NEW YORK ( TheStreet) -- Select Medical Holdings Corporation (NYSE: SEM) 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, solid stock price performance 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 poor profit margins. Highlights from the ratings report include:
- SEM's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 12.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for SELECT MEDICAL HOLDINGS CORP is rather low; currently it is at 16.50%. Regardless of SEM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SEM's net profit margin of 5.10% compares favorably to the industry average.
- Currently the debt-to-equity ratio of 1.63 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, SEM's quick ratio is somewhat strong at 1.11, demonstrating the ability to handle short-term liquidity needs.
-- Written by a member of TheStreet Ratings Staff