NEW YORK (TheStreet) -- LogMeIn (Nasdaq:LOGM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 216.9% when compared to the same quarter one year prior, rising from -$0.07 million to $0.08 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 23.3%. Since the same quarter one year prior, revenues rose by 20.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- LOGM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.67, which clearly demonstrates the ability to cover short-term cash needs.
- LOGMEIN INC has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, LOGMEIN INC reported lower earnings of $0.23 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.23).
- The gross profit margin for LOGMEIN INC is currently very high, coming in at 93.40%. Regardless of LOGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LOGM's net profit margin of 0.20% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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