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) -- Health Management Associates (NYSE: HMA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- HMA's revenue growth has slightly outpaced the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 18.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Compared to its closing price of one year ago, HMA's share price has jumped by 51.22%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HMA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HEALTH MANAGEMENT ASSOC reported flat earnings per share in the most recent quarter. 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, HEALTH MANAGEMENT ASSOC increased its bottom line by earning $0.72 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($0.82 versus $0.72).
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income has decreased by 5.5% when compared to the same quarter one year ago, dropping from $43.73 million to $41.34 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, HEALTH MANAGEMENT ASSOC's return on equity exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff