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) -- Pharmerica Corporation (NYSE: PMC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, increase in net income, 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 shows low profit margins.
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- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 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 87.5% when compared to the same quarter one year prior, rising from $5.60 million to $10.50 million.
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, PMC has a quick ratio of 2.30, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 139.69% to $47.70 million when compared to the same quarter last year. In addition, PHARMERICA CORP has also vastly surpassed the industry average cash flow growth rate of -59.95%.
-- Written by a member of TheStreet Ratings Staff