Community Health Systems Inc Stock Upgraded (CYH)

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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Highlights from the ratings report include:
  • 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.

Community Health Systems, Inc., together with its subsidiaries, provides general and specialized hospital healthcare services to patients in the United States. Community Health Systems has a market cap of $4.7 billion and is part of the health care sector and health services industry. Shares are up 5.5% year to date as of the close of trading on Wednesday.

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

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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