Epiq Systems Inc. Stock Upgraded (EPIQ)

NEW YORK (TheStreet) -- Epiq Systems (Nasdaq:EPIQ) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, 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 lackluster performance in the stock itself.

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Highlights from the ratings report include:

• The revenue growth greatly exceeded the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 48.4%. 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 increased to $15.10 million or 40.38% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.55%.
• EPIQ's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that EPIQ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.69 is high and demonstrates strong liquidity.
• EPIQ SYSTEMS INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, EPIQ SYSTEMS INC reported lower earnings of $0.33 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.33).
• The gross profit margin for EPIQ SYSTEMS INC is rather high; currently it is at 57.50%. Regardless of EPIQ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPIQ's net profit margin of 2.30% is significantly lower than the same period one year prior.

Epiq Systems, Inc. provides integrated technology solutions for the legal profession in the United States and internationally. Its solutions streamline the administration of bankruptcy, litigation, financial transactions, and regulatory compliance matters. The company has a P/E ratio of 38.3, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Epiq Systems has a market cap of $427.7 million and is part of the technology sector and computer software & services industry. Shares are up 1.9% year to date as of the close of trading on Monday.

You can view the full Epiq Systems Ratings Report or get investment ideas from our investment research center.

-- 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.

For more information on Epiq Systems Inc. click any of the following:

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• Epiq Systems Inc. Ratio Comparison

• Epiq Systems Inc. Growth Rates

• Epiq Systems Inc. Balance Sheet

• Epiq Systems Inc. Cash Flow

• Epiq Systems Inc. Income Statement