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, reasonable valuation levels, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:
  • ESRX's very impressive revenue growth greatly exceeded the industry average of 16.5%. 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 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 20.5% when compared to the same quarter one year prior, going from $324.70 million to $391.40 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • 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).

Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services in North America. Express Scripts has a market cap of $45.51 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 32.2, above the S&P 500 P/E ratio of 17.7. Shares are up 3.2% year to date as of the close of trading on Monday.

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.

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