Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Community Health Systems (NYSE: CYH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Net operating cash flow has increased to $647.62 million or 28.94% when compared to the same quarter last year. In addition, COMMUNITY HEALTH SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of -26.15%.
- COMMUNITY HEALTH SYSTEMS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COMMUNITY HEALTH SYSTEMS INC reported lower earnings of $1.52 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($3.11 versus $1.52).
- CYH, with its decline in revenue, underperformed when compared the industry average of 11.1%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 3.08 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, CYH's quick ratio is somewhat strong at 1.11, demonstrating the ability to handle short-term liquidity needs.