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) -- Emeritus Corporation (NYSE: ESC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
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- ESC's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 19.0%. 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- EMERITUS CORP's earnings per share declined by 49.2% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, EMERITUS CORP reported poor results of -$3.05 versus -$1.72 in the prior year. This year, the market expects an improvement in earnings (-$1.87 versus -$3.05).
- The gross profit margin for EMERITUS CORP is rather low; currently it is at 21.92%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.41% is significantly below that of the industry average.
- Net operating cash flow has decreased to $4.35 million or 26.76% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, EMERITUS CORP has marginally lower results.