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 downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.
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- HMA, with its decline in revenue, underperformed when compared the industry average of 14.3%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Compared to its closing price of one year ago, HMA's share price has jumped by 60.19%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The gross profit margin for HEALTH MANAGEMENT ASSOC is currently extremely low, coming in at 13.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.55% trails that of the industry average.
- Net operating cash flow has significantly decreased to $19.34 million or 67.28% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HEALTH MANAGEMENT ASSOC has marginally lower results.
-- Written by a member of TheStreet Ratings Staff