3 Stocks Pushing The Health Services Industry Lower

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The Health Services industry as a whole closed the day down 0.6% versus the S&P 500, which was down 0.2%. Laggards within the Health Services industry included Allied Healthcare Products ( AHPI), down 1.8%, American Shared Hospital Services ( AMS), down 4.5%, Electromed ( ELMD), down 2.2%, USMD Holdings ( USMD), down 2.1% and Arrhythmia Research Technology ( HRT), down 2.0%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Acadia Healthcare ( ACHC) is one of the companies that pushed the Health Services industry lower today. Acadia Healthcare was down $1.73 (3.4%) to $49.47 on light volume. Throughout the day, 261,571 shares of Acadia Healthcare exchanged hands as compared to its average daily volume of 451,100 shares. The stock ranged in price between $49.35-$51.54 after having opened the day at $51.42 as compared to the previous trading day's close of $51.20.

Acadia Healthcare Company, Inc. develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, and substance abuse facilities in the United States. Acadia Healthcare has a market cap of $3.1 billion and is part of the health care sector. Shares are up 8.2% year-to-date as of the close of trading on Wednesday. Currently there are 7 analysts who rate Acadia Healthcare a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates Acadia Healthcare as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on ACHC go as follows:

  • ACADIA HEALTHCARE CO INC reported significant earnings per share improvement 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 two years. We feel that this trend should continue. During the past fiscal year, ACADIA HEALTHCARE CO INC increased its bottom line by earning $0.86 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $0.86).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 84.1% when compared to the same quarter one year prior, rising from $12.20 million to $22.45 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 20.6%. Since the same quarter one year prior, revenues rose by 20.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.79, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 79.16% and other important driving factors, this stock has surged by 37.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

You can view the full analysis from the report here: Acadia Healthcare Ratings Report

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At the close, Electromed ( ELMD) was down $0.03 (2.2%) to $1.35 on light volume. Throughout the day, 7,110 shares of Electromed exchanged hands as compared to its average daily volume of 23,300 shares. The stock ranged in price between $1.35-$1.39 after having opened the day at $1.38 as compared to the previous trading day's close of $1.38.

Electromed, Inc. develops, manufactures, markets, and sells airway clearance therapy products. Electromed has a market cap of $11.0 million and is part of the health care sector. Shares are down 59.4% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates Electromed a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Electromed as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and disappointing return on equity.

Highlights from TheStreet Ratings analysis on ELMD go as follows:

  • ELECTROMED 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ELECTROMED INC swung to a loss, reporting -$0.16 versus $0.02 in the prior year. For the next year, the market is expecting a contraction of 18.8% in earnings (-$0.19 versus -$0.16).
  • 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 Equipment & Supplies industry. The net income has significantly decreased by 132.9% when compared to the same quarter one year ago, falling from -$0.43 million to -$1.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ELECTROMED INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ELECTROMED INC is rather high; currently it is at 68.31%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ELMD's net profit margin of -25.37% significantly underperformed when compared to the industry average.
  • Net operating cash flow has increased to -$0.11 million or 47.16% when compared to the same quarter last year. In addition, ELECTROMED INC has also vastly surpassed the industry average cash flow growth rate of -19.95%.

You can view the full analysis from the report here: Electromed Ratings Report

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Allied Healthcare Products ( AHPI) was another company that pushed the Health Services industry lower today. Allied Healthcare Products was down $0.04 (1.8%) to $2.04 on light volume. Throughout the day, 1,183 shares of Allied Healthcare Products exchanged hands as compared to its average daily volume of 12,600 shares. The stock ranged in price between $2.04-$2.09 after having opened the day at $2.09 as compared to the previous trading day's close of $2.08.

Allied Healthcare Products, Inc. manufactures, markets, and distributes respiratory care products, medical gas equipment, and emergency medical products in Canada, Mexico, Central and South America, Europe, the Middle East, and the Far East. Allied Healthcare Products has a market cap of $16.0 million and is part of the health care sector. Shares are down 8.8% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Allied Healthcare Products as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on AHPI go as follows:

  • ALLIED HEALTHCARE PRODS 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. During the past fiscal year, ALLIED HEALTHCARE PRODS INC reported poor results of -$0.15 versus -$0.06 in the prior year.
  • 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 Equipment & Supplies industry. The net income has significantly decreased by 247.3% when compared to the same quarter one year ago, falling from -$0.28 million to -$0.97 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ALLIED HEALTHCARE PRODS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ALLIED HEALTHCARE PRODS INC is rather low; currently it is at 22.80%. Regardless of AHPI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, AHPI's net profit margin of -10.63% significantly underperformed when compared to the industry average.
  • The share price of ALLIED HEALTHCARE PRODS INC has not done very well: it is down 16.14% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

You can view the full analysis from the report here: Allied Healthcare Products Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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