NEW YORK ( TheStreet) -- Pharmerica Corporation (NYSE: PMC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- PHARMERICA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PHARMERICA CORP increased its bottom line by earning $0.79 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $0.79).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 68.1% when compared to the same quarter one year prior, rising from $4.70 million to $7.90 million.
- Net operating cash flow has significantly decreased to $14.50 million or 50.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- PMC has underperformed the S&P 500 Index, declining 9.81% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff