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 downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- The revenue growth came in higher than the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 26.7%. 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.
- Net operating cash flow has increased to $65.00 million or 13.72% when compared to the same quarter last year. In addition, COMMUNITY HEALTH SYSTEMS INC has also modestly surpassed the industry average cash flow growth rate of 6.10%.
- 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 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, 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 ($2.97 versus $1.52).
- The gross profit margin for COMMUNITY HEALTH SYSTEMS INC is currently extremely low, coming in at 11.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.66% trails that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 241.5% when compared to the same quarter one year ago, falling from $79.17 million to -$112.00 million.