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) -- Tenet Healthcare (NYSE: THC) 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 also find weaknesses including generally higher debt management risk and poor profit margins.
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- Powered by its strong earnings growth of 186.66% and other important driving factors, this stock has surged by 63.79% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although THC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- TENET HEALTHCARE CORP 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, TENET HEALTHCARE CORP increased its bottom line by earning $1.72 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $1.72).
- Net operating cash flow has increased to $256.00 million or 47.97% when compared to the same quarter last year. Despite an increase in cash flow of 47.97%, TENET HEALTHCARE CORP is still growing at a significantly lower rate than the industry average of 1062.44%.
- The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 14.40%. Regardless of THC'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 2.10% trails the industry average.
- The debt-to-equity ratio is very high at 4.59 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, THC's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.
-- Written by a member of TheStreet Ratings Staff