NEW YORK (TheStreet) -- Electronics for Imaging (Nasdaq:EFII) has been downgraded by TheStreet Ratings from buy to hold. 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.
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- The revenue growth significantly trails the industry average of 59.2%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- EFII 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. To add to this, EFII has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
- ELECTRONICS FOR IMAGING INC reported flat earnings per share in the most recent quarter. 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, ELECTRONICS FOR IMAGING INC increased its bottom line by earning $0.58 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $0.58).
- Net operating cash flow has decreased to $9.97 million or 10.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- EFII has underperformed the S&P 500 Index, declining 5.64% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
-- 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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