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"We rate NXSTAGE MEDICAL INC (NXTM) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NXTM's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 12.6%. 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.
- NXTM's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NXTM has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs.
- 47.21% is the gross profit margin for NXSTAGE MEDICAL INC which we consider to be strong. Regardless of NXTM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NXTM's net profit margin of -8.90% significantly underperformed when compared to the industry average.
- 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 Equipment & Supplies industry. The net income has significantly decreased by 34.5% when compared to the same quarter one year ago, falling from -$4.99 million to -$6.71 million.
- 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. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, NXSTAGE MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: NXTM Ratings Report