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 and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

• EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

• ESRX's very impressive revenue growth greatly exceeded the industry average of 14.0%. Since the same quarter one year prior, revenues leaped by 133.0%. 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.
• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Providers & Services industry average. The net income increased by 20.5% when compared to the same quarter one year prior, going from $324.70 million to $391.40 million.
• EXPRESS SCRIPTS HOLDING CO's earnings per share declined by 28.8% 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, 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 ($3.72 versus $2.52).
• The gross profit margin for EXPRESS SCRIPTS HOLDING CO is currently extremely low, coming in at 8.20%. Regardless of ESRX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.44% trails the industry average.
• In its most recent trading session, ESRX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services in North America. Express Scripts has a market cap of $43.95 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 31.2, above the S&P 500 P/E ratio of 17.7. Shares are down 0.2% 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.

It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE