Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
NEW YORK (TheStreet) -- Wellcare Health Plans (WCG) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate WELLCARE HEALTH PLANS INC (WCG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Must Read: Warren Buffett's 25 Favorite Stocks
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 36.3%. 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.
- The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WCG has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 53.05% to $426.00 million when compared to the same quarter last year. In addition, WELLCARE HEALTH PLANS INC has also vastly surpassed the industry average cash flow growth rate of -24.10%.
- In its most recent trading session, WCG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- WELLCARE HEALTH PLANS 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, WELLCARE HEALTH PLANS INC reported lower earnings of $3.98 versus $4.22 in the prior year. For the next year, the market is expecting a contraction of 48.5% in earnings ($2.05 versus $3.98).
- You can view the full analysis from the report here: WCG Ratings Report