NetApp Inc. Stock Buy Recommendation Reiterated (NTAP)

Editor's Note: 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.

NEW YORK (TheStreet) -- NetApp (Nasdaq:NTAP) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . 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, good cash flow from operations, growth in earnings per share and increase in net income. 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:

• 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 19.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• Although NTAP's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
• Net operating cash flow has increased to $582.60 million or 32.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.25%.
• NETAPP INC has improved earnings per share by 17.5% 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, NETAPP INC reported lower earnings of $1.57 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.57).
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Computers & Peripherals industry average. The net income increased by 12.5% when compared to the same quarter one year prior, going from $160.60 million to $180.70 million.

NetApp, Inc. engages in design, manufacture, marketing, and technical support of networked storage solutions. The company supply enterprise storage and data management software, and hardware products and services. The company has a P/E ratio of 19.9, below the average computer hardware industry P/E ratio of 20.9 and above the S&P 500 P/E ratio of 17.7. NetApp has a market cap of $12.29 billion and is part of the technology sector and computer hardware industry. Shares are down 12.3% year to date as of the close of trading on Wednesday.

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

--Written by a member of TheStreet Ratings Staff.

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

• NetApp Inc. Stock Price

• NetApp Inc. Analyst Ratings

• NetApp Inc. Key Stats & Profile

• NetApp Inc. Earnings

• NetApp Inc. Ratio Comparison

• NetApp Inc. Growth Rates

• NetApp Inc. Balance Sheet

• NetApp Inc. Cash Flow

• NetApp Inc. Income Statement