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"We rate ACTAVIS PLC (ACT) 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, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ACT's very impressive revenue growth greatly exceeded the industry average of 8.7%. Since the same quarter one year prior, revenues leaped by 83.0%. 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.
- Compared to its closing price of one year ago, ACT's share price has jumped by 59.25%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ACT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Net operating cash flow has significantly increased by 92.87% to $522.30 million when compared to the same quarter last year. In addition, ACTAVIS PLC has also vastly surpassed the industry average cash flow growth rate of -33.57%.
- The gross profit margin for ACTAVIS PLC is rather high; currently it is at 64.53%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -28.31% is in-line with the industry average.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that ACT's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: ACT Ratings Report