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) -- Sap AG ADR (NYSE:SAP) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- The revenue growth came in higher than the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 30.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 4.5% when compared to the same quarter one year prior, going from $1,446.20 million to $1,511.28 million.
- The gross profit margin for SAP AG is currently very high, coming in at 77.30%. Regardless of SAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.61% trails the industry average.
- SAP AG's earnings per share improvement from the most recent quarter was slightly positive. 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, SAP AG reported lower earnings of $3.12 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($3.51 versus $3.12).
--Written by a member of TheStreet Ratings Staff.It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE
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