Epiq Systems Inc. Stock Downgraded (EPIQ)

NEW YORK (TheStreet) -- Epiq Systems (Nasdaq:EPIQ) 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, reasonable valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 32.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• EPIQ SYSTEMS INC reported significant earnings per share improvement 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, 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).
• EPIQ has underperformed the S&P 500 Index, declining 18.51% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
• The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, EPIQ SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.

Epiq Systems, Inc. provides integrated technology solutions for the legal profession in the United States and internationally. Its solutions streamline the administration of discovery, bankruptcy, litigation, financial transactions, and regulatory compliance matters. The company has a P/E ratio of 28.9, below the average computer software & services industry P/E ratio of 36.4 and above the S&P 500 P/E ratio of 17.7. Epiq Systems has a market cap of $406.8 million and is part of the technology sector and computer software & services industry. Shares are down 6.1% year to date as of the close of trading on Thursday.

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:

• Epiq Systems Inc. Stock Price

• Epiq Systems Inc. Analyst Ratings

• Epiq Systems Inc. Key Stats & Profile

• Epiq Systems Inc. Earnings

• 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