Express Scripts Stock Buy Recommendation Reiterated (ESRX)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Express Scripts (Nasdaq: ESRX) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • ESRX's very impressive revenue growth greatly exceeded the industry average of 26.4%. Since the same quarter one year prior, revenues leaped by 143.4%. 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 significantly increased by 58.29% to $726.10 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 36.64%.
  • Compared to its closing price of one year ago, ESRX's share price has jumped by 61.92%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • EXPRESS SCRIPTS HOLDING CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXPRESS SCRIPTS HOLDING CO increased its bottom line by earning $2.52 versus $2.22 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $2.52).

Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services in North America. The company has a P/E ratio of 33.2, above the average health services industry P/E ratio of 31.6 and above the S&P 500 P/E ratio of 17.7. Express Scripts has a market cap of $51.73 billion and is part of the health care sector and health services industry. Shares are up 42.8% year to date as of the close of trading on Wednesday.

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

--Written by a member of TheStreet Ratings Staff.

FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free Download Now
null

If you liked this article you might like

Here's How to Invest Like a Billionaire

The Dow Binges on Earnings

Alphabet Slides After a So-So Quarter - 5 Things You Must Know Before the Market Opens