AthenaHealth Inc. (ATHN): Today's Featured Diversified Services Laggard

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.

AthenaHealth ( ATHN) pushed the Diversified Services industry lower today making it today's featured Diversified Services laggard. The industry as a whole closed the day up 0.5%. By the end of trading, AthenaHealth fell 95 cents (-1.1%) to $86.47 on light volume. Throughout the day, 398,242 shares of AthenaHealth exchanged hands as compared to its average daily volume of 562,300 shares. The stock ranged in price between $86.36-$87.91 after having opened the day at $86.89 as compared to the previous trading day's close of $87.42. Other companies within the Diversified Services industry that declined today were: School Specialty ( SCHS), down 28.9%, Exponent ( EXPO), down 10.8%, American Learning ( ALRN), down 8.4%, and Innovaro ( INV), down 8.2%.
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athenahealth, Inc., a business services company, provides ongoing billing, clinical-related, and other related services to medical group practices primarily in the United States. The company provides services through the athenaNet, a proprietary Internet-based practice management application. AthenaHealth has a market cap of $3.2 billion and is part of the services sector. The company has a P/E ratio of 176.8, above the S&P 500 P/E ratio of 17.7. Shares are up 20.6% year to date as of the close of trading on Wednesday. Currently there are eight analysts that rate AthenaHealth a buy, one analyst rates it a sell, and 11 rate it a hold.

TheStreet Ratings rates AthenaHealth as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, premium valuation and weak operating cash flow.

On the positive front, Education Management Corporation ( EDMC), up 22.7%, Performant Financial ( PFMT), up 15.2%, Lender Processing Services ( LPS), up 7.3%, and Lime Energy ( LIME), up 7.2%, were all gainers within the diversified services industry with Paychex ( PAYX) being today's featured diversified services industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the diversified services industry could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the diversified services industry could consider ProShares Ultra Short Consumer Sers ( SCC).

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