Informatica Corporation Stock Downgraded (INFA)

NEW YORK (TheStreet) -- Informatica Corporation (Nasdaq:INFA) 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, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

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Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 16.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• INFA 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, INFA has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
• Net operating cash flow has increased to $69.47 million or 12.53% when compared to the same quarter last year. Despite an increase in cash flow, INFORMATICA CORP's average is still marginally south of the industry average growth rate of 16.56%.
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Software industry and the overall market, INFORMATICA CORP's return on equity is below that of both the industry average and the S&P 500.
• INFA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 51.02%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

Informatica Corporation provides enterprise data integration and data quality software and services worldwide. The company has a P/E ratio of 27.5, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Informatica has a market cap of $3.25 billion and is part of the technology sector and computer software & services industry. Shares are down 18.7% year to date as of the close of trading on Thursday.

You can view the full Informatica 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 Informatica Corporation click any of the following:

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• Informatica Corporation Key Stats & Profile

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• Informatica Corporation Income Statement