Datalink Corporation Stock Upgraded (DTLK)

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) -- Datalink Corporation (Nasdaq:DTLK) 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, increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. 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 came in higher than the industry average of 18.0%. Since the same quarter one year prior, revenues rose by 28.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 23.8% when compared to the same quarter one year prior, going from $2.61 million to $3.23 million.
• DATALINK CORP has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, DATALINK CORP's EPS of $0.59 remained unchanged from the prior years' EPS of $0.59. This year, the market expects an improvement in earnings ($0.96 versus $0.59).
• Although DTLK's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
• 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. In comparison to the other companies in the Computers & Peripherals industry and the overall market, DATALINK CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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Datalink Corporation engages in the design, installation, and support of data center solutions to mid and large-size companies. The company has a P/E ratio of 11.2, below the S&P 500 P/E ratio of 17.7. Datalink has a market cap of $182.8 million and is part of the technology sector and computer hardware industry. Shares are up 15.4% year to date as of the close of trading on Tuesday.

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

-- 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.

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