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TheStreet Open House

Why NetApp (NTAP) Is a "Buy"

NEW YORK (TheStreet) -- TheStreet Ratings team has reiterated its "buy" rating for NetApp (NTAP), with a ratings score of B-.

Shares of NetApp gained 6.2% to $42.69 Wednesday, rising as high as $42.94 during intra-day trading.

The computer storage company gained just 0.2% over the past six months, but is up 20% over the past year. NetApp hit a 52-week high of $44.32 on Sept. 19. More than 5.1 million shares of the company were traded by mid-day Wednesday, already above the average daily trading volume of about 4 million. NTAP Chart NTAP data by YCharts

TheStreet Ratings team rates NETAPP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETAPP INC (NTAP) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 52.2% when compared to the same quarter one year prior, rising from $109.60 million to $166.80 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 0.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although NTAP's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 2.44, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has slightly increased to $362.50 million or 7.75% when compared to the same quarter last year. In addition, NETAPP INC has also modestly surpassed the industry average cash flow growth rate of 6.76%.
  • The gross profit margin for NETAPP INC is rather high; currently it is at 67.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.76% trails the industry average.
  • You can view the full analysis from the report here: NTAP Ratings Report

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