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"We rate WEBMD HEALTH CORP (WBMD) 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 impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WEBMD HEALTH CORP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WEBMD HEALTH CORP turned its bottom line around by earning $0.33 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.33).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 272.1% when compared to the same quarter one year prior, rising from $2.61 million to $9.72 million.
- The gross profit margin for WEBMD HEALTH CORP is rather high; currently it is at 61.21%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WBMD's net profit margin of 6.92% significantly trails the industry average.
- Powered by its strong earnings growth of 360.00% and other important driving factors, this stock has surged by 51.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The debt-to-equity ratio is very high at 6.41 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.78, which shows the ability to cover short-term cash needs.
- You can view the full analysis from the report here: WBMD Ratings Report
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