NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,800 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 132 U.S. common stocks for week ending August 19, 2011. 16 stocks were upgraded and 116 stocks were downgraded by our stock model.
Rating Change #10
Salesforce.com (CRM - Get Report) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 38.4%. 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.
- Net operating cash flow has slightly increased to $82.93 million or 8.98% when compared to the same quarter last year. In addition, SALESFORCE.COM INC has also modestly surpassed the industry average cash flow growth rate of 7.41%.
- The gross profit margin for SALESFORCE.COM INC is currently very high, coming in at 77.90%. Regardless of CRM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CRM's net profit margin of -0.80% 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 Software industry. The net income has significantly decreased by 128.9% when compared to the same quarter one year ago, falling from $14.74 million to -$4.27 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 Software industry and the overall market, SALESFORCE.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.