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) -- IPC The Hospitalist (Nasdaq: IPCM) 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 largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 16.9%. Since the same quarter one year prior, revenues rose by 12.8%. 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.
- IPCM's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, IPCM has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
- IPC THE HOSPITALIST CO INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, IPC THE HOSPITALIST CO INC increased its bottom line by earning $2.38 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.41 versus $2.38).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry average. The net income has decreased by 2.2% when compared to the same quarter one year ago, dropping from $10.51 million to $10.27 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, IPC THE HOSPITALIST CO INC's return on equity is below that of both the industry average and the S&P 500.