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NEW YORK (TheStreet) -- Providence Service (PRSC) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROVIDENCE SERVICE CORP (PRSC) 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 robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 19.4%. Since the same quarter one year prior, revenues rose by 42.5%. 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 slightly increased to $16.10 million or 3.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.10%.
- PROVIDENCE SERVICE CORP 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. 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, PROVIDENCE SERVICE CORP increased its bottom line by earning $1.41 versus $0.65 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.41).
- 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, PROVIDENCE SERVICE CORP's return on equity is below that of both the industry average and the S&P 500.
- 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 Providers & Services industry. The net income has significantly decreased by 92.5% when compared to the same quarter one year ago, falling from $3.53 million to $0.27 million.
- You can view the full analysis from the report here: PRSC Ratings Report