WellPoint Inc Stock Buy Recommendation Reiterated (WLP)

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) -- WellPoint (NYSE: WLP) 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 increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. 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:
  • 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 38.4% when compared to the same quarter one year prior, rising from $335.30 million to $464.20 million.
  • WLP's revenue growth trails the industry average of 18.1%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, WLP has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 1212.26% to $759.80 million when compared to the same quarter last year. In addition, WELLPOINT INC has also vastly surpassed the industry average cash flow growth rate of 534.72%.

WellPoint, Inc., through its subsidiaries, operates as a health benefits company in the United States. The company offers various network-based managed care plans to large and small employer, individual, Medicaid, and senior markets. WellPoint has a market cap of $19.13 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 8.3, below the S&P 500 P/E ratio of 17.7. Shares are up 3.4% year to date as of the close of trading on Thursday.

You can view the full WellPoint Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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