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Perion Network Ltd. Stock Downgraded (PERI)

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) -- Perion Network (Nasdaq: PERI) 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, solid stock price performance and reasonable valuation levels. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • PERI's very impressive revenue growth greatly exceeded the industry average of 33.5%. Since the same quarter one year prior, revenues leaped by 107.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 150.00% and other important driving factors, this stock has surged by 94.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Although PERI's debt-to-equity ratio of 0.16 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 0.81 is somewhat weak and could be cause for future problems.
  • PERION NETWORK LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PERION NETWORK LTD reported lower earnings of $0.35 versus $0.56 in the prior year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Internet Software & Services industry and the overall market, PERION NETWORK LTD's return on equity is below that of both the industry average and the S&P 500.
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Perion Network Ltd., together with its subsidiaries, operates as a digital media company that provides products and services to consumers. The company has a P/E ratio of 17.2, below the S&P 500 P/E ratio of 17.7. Perion Network has a market cap of $96.7 million and is part of the technology sector and computer software & services industry. Shares are up 12.2% year to date as of the close of trading on Thursday.

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

-- Written by a member of TheStreet Ratings Staff

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