RadNet Inc. Stock Downgraded (RDNT)

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) -- RadNet (Nasdaq: RDNT) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share.

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Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 1109.0% when compared to the same quarter one year ago, falling from -$0.11 million to -$1.34 million.
  • Net operating cash flow has declined marginally to $15.22 million or 1.36% when compared to the same quarter last year. Despite a decrease in cash flow RADNET INC is still fairing well by exceeding its industry average cash flow growth rate of -41.38%.
  • RADNET INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RADNET INC increased its bottom line by earning $1.62 versus $0.19 in the prior year. For the next year, the market is expecting a contraction of 81.5% in earnings ($0.30 versus $1.62).
  • This stock's share value has moved by only 17.83% over the past year. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 6.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
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RadNet, Inc. provides outpatient diagnostic imaging services in the United States. The company has a P/E ratio of 1.6, below the S&P 500 P/E ratio of 17.7. RadNet has a market cap of $105 million and is part of the health care sector and health services industry. Shares are up 3.6% year to date as of the close of trading on Monday.

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

-- Written by a member of TheStreet Ratings Staff

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