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) -- Sourcefire (Nasdaq:FIRE) 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The revenue growth came in higher than the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 21.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- SOURCEFIRE INC has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, SOURCEFIRE INC reported lower earnings of $0.16 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.16).
- The gross profit margin for SOURCEFIRE INC is currently very high, coming in at 73.60%. Regardless of FIRE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FIRE's net profit margin of -0.04% significantly underperformed when compared to the industry average.
- This stock's share value has moved by only 6.34% over the past year. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- Net operating cash flow has decreased to $15.88 million or 19.30% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- 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. Exclusive Offer: Jim Cramer's 'go-to' small/mid-cap guru Bryan Ashenberg only buys stocks he thinks could return 50-100% See his top picks for 14-days FREE.
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