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) -- Progress Software (Nasdaq:PRGS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- PRGS 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, PRGS has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
- PROGRESS SOFTWARE CORP's earnings per share declined by 14.3% 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, PROGRESS SOFTWARE CORP increased its bottom line by earning $0.87 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.87).
- The gross profit margin for PROGRESS SOFTWARE CORP is currently very high, coming in at 79.50%. Regardless of PRGS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PRGS's net profit margin of 5.40% compares favorably to the industry average.
- PRGS, with its decline in revenue, underperformed when compared the industry average of 8.1%. Since the same quarter one year prior, revenues fell by 13.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
-- Written by a member of TheStreet Ratings Staff
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. FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free download now.
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