The firm said it raised its rating on the company, which provides best practices research and analysis, software tools, and management and advisory services to health care and education industries, as it believes demand for analytics software from hospitals seems to be at an inflection point.
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Separately, TheStreet Ratings team rates ADVISORY BOARD CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ADVISORY BOARD CO (ABCO) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.9%. Since the same quarter one year prior, revenues rose by 15.1%. 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 significantly increased by 161.51% to $2.22 million when compared to the same quarter last year. In addition, ADVISORY BOARD CO has also vastly surpassed the industry average cash flow growth rate of 17.25%.
- ABCO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
- 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 Professional Services industry and the overall market, ADVISORY BOARD CO's return on equity is below that of both the industry average and the S&P 500.
- The share price of ADVISORY BOARD CO has not done very well: it is down 14.72% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: ABCO Ratings Report
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