TheStreet Ratings team rates EDUCATION MANAGEMENT CORP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EDUCATION MANAGEMENT CORP (EDMC) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has decreased to $127.21 million or 18.75% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 5.20 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, EDMC's quick ratio is somewhat strong at 1.20, demonstrating the ability to handle short-term liquidity needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, EDUCATION MANAGEMENT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- EDMC, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 38.52% is the gross profit margin for EDUCATION MANAGEMENT CORP which we consider to be strong. Regardless of EDMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.63% trails the industry average.
- You can view the full analysis from the report here: EDMC Ratings Report