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) -- Skilled Healthcare Group (NYSE: SKH) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and generally higher debt management risk.
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- Powered by its strong earnings growth of 102.55% and other important driving factors, this stock has surged by 80.54% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- 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 102.6% when compared to the same quarter one year prior, rising from -$232.81 million to $6.07 million.
- SKILLED HEALTHCARE GROUP INC reported significant earnings per share improvement in the most recent quarter compared to 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, SKILLED HEALTHCARE GROUP INC reported poor results of -$5.48 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus -$5.48).
- Net operating cash flow has decreased to $16.82 million or 19.77% when compared to the same quarter last year. Despite a decrease in cash flow of 19.77%, SKILLED HEALTHCARE GROUP INC is still significantly exceeding the industry average of -81.21%.
- The gross profit margin for SKILLED HEALTHCARE GROUP INC is currently extremely low, coming in at 13.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.80% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff