Will VCA (WOOF) Stock Benefit From This Analyst Upgrade?

NEW YORK (TheStreet) -- VCA Inc  (WOOF) had their rating raised to "hold" from "sell" at Stifel  (SF) today as the firm said its survey of veterinarians indicates that the animal healthcare company's end market is improving.

Shares of VCA closed at $36.77 yesterday.

Separately, TheStreet Ratings team rates VCA INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate VCA INC (WOOF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.65% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • VCA INC has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, VCA INC increased its bottom line by earning $1.53 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($1.82 versus $1.53).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income increased by 11.7% when compared to the same quarter one year prior, going from $30.49 million to $34.04 million.
  • WOOF's revenue growth trails the industry average of 15.7%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: WOOF Ratings Report
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