Rating Change #4
Acacia Research Corporation (ACTG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, robust revenue growth, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.76 is very high and demonstrates very strong liquidity.
- ACTG's very impressive revenue growth greatly exceeded the industry average of 9.7%. Since the same quarter one year prior, revenues leaped by 58.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $16.45 million or 12.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.49%.
- Powered by its strong earnings growth of 37.50% and other important driving factors, this stock has surged by 32.24% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- ACACIA RESEARCH CORP has improved earnings per share by 37.5% 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, ACACIA RESEARCH CORP reported lower earnings of $0.54 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $0.54).
Acacia Research Corporation, through its subsidiaries, acquires, develops, licenses, and enforces patented technologies in the United States. Acacia Research Coroporation has a market cap of $1.73 billion and is part of the services sector and diversified services industry. Shares are up 17.1% year to date as of the close of trading on Wednesday.You can view the full Acacia Research Coroporation Ratings Report or get investment ideas from our investment research center.
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