Why Hanger (HGR) Is Down Today

NEW YORK (TheStreet) -- Hanger  (HGR) was falling 13.03% to $33.99 on Friday after the prosthetic and orthopedics maker lowered earnings guidance for the year.

The company said it expects adjusted earnings of $1.94 to $1.96 a share; in October it forecast earnings of between $2.08 and $2.11 a share. Hanger said operating problems in a small non-clinic unit within the company's patient care segment were the main reason for lowering guidance.  

"We are clearly disappointed that operating problems at this unit impacted our fourth quarter results," said President and CEO Vinit Asar in the company's statement. "Despite this unfortunate setback we still anticipate delivering adjusted EPS growth of at least 8% for 2013. We remain confident in our core business and expect to deliver adjusted EPS growth of approximately 10% in 2014."

Hanger will release its full earnings results on Feb. 12.

TheStreet Ratings team rates HANGER INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about its recommendation:

"We rate HANGER INC (HGR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HGR's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 11.8%. 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 0.85, 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, HGR has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 37.12% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HGR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • HANGER INC has improved earnings per share by 22.0% 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. We feel that this trend should continue. During the past fiscal year, HANGER INC increased its bottom line by earning $1.87 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.87).
  • 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 24.9% when compared to the same quarter one year prior, going from $17.34 million to $21.66 million.
  • You can view the full analysis from the report here: HGR Ratings Report

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