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"We rate MERGE HEALTHCARE INC (MRGE) 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 solid stock price performance, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 150.00% and other important driving factors, this stock has surged by 31.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- 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 142.1% when compared to the same quarter one year prior, rising from -$4.11 million to $1.73 million.
- MERGE HEALTHCARE INC reported significant earnings per share improvement in the most recent quarter compared to 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, MERGE HEALTHCARE INC reported poor results of -$0.41 versus -$0.31 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$0.41).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Technology industry and the overall market, MERGE HEALTHCARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 4.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MRGE maintains a poor quick ratio of 0.99, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: MRGE Ratings Report