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) -- Gentiva Health Services (Nasdaq: GTIV) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.
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- Powered by its strong earnings growth of 154.54% and other important driving factors, this stock has surged by 25.36% 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.
- GENTIVA HEALTH SERVICES INC 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, GENTIVA HEALTH SERVICES INC turned its bottom line around by earning $0.88 versus -$15.14 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $0.88).
- 46.10% is the gross profit margin for GENTIVA HEALTH SERVICES INC which we consider to be strong. Regardless of GTIV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.01% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Health Care Providers & Services industry and the overall market, GENTIVA HEALTH SERVICES INC's return on equity is below that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 3.98 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, GTIV has managed to keep a strong quick ratio of 1.58, which demonstrates the ability to cover short-term cash needs.
-- Written by a member of TheStreet Ratings Staff