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"We rate HEALTHSTREAM INC (HSTM) a BUY. This is driven by a few notable 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, reasonable valuation levels, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 18.2%. Since the same quarter one year prior, revenues rose by 32.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HSTM 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. To add to this, HSTM has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
- HEALTHSTREAM 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 year. We feel that this trend should continue. During the past fiscal year, HEALTHSTREAM INC increased its bottom line by earning $0.30 versus $0.28 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.30).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Technology industry. The net income increased by 49.6% when compared to the same quarter one year prior, rising from $2.30 million to $3.44 million.
- You can view the full analysis from the report here: HSTM Ratings Report