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 A-. 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 growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- The net income growth 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 increased by 3.4% when compared to the same quarter one year prior, going from $856.50 million to $885.20 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 16.3%. Since the same quarter one year prior, revenues rose by 14.7%. 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 0.61, 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 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
- WELLPOINT INC has improved earnings per share by 14.2% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WELLPOINT INC increased its bottom line by earning $8.13 versus $7.19 in the prior year. For the next year, the market is expecting a contraction of 2.1% in earnings ($7.96 versus $8.13).
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