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TheStreet Open House

Why Lionbridge Technologies (LIOX) Is Surging Today

Stocks in this article: LIOX

NEW YORK (TheStreet) -- Lionbridge Technologies  (LIOX) was soaring 26.23% to $6.69 on Tuesday after the translation and localization services company announced fourth-quarter earnings that surpassed analysts' expectations.

The company posted adjusted earnings of $10.9 million, or 18 cents a share, which beat the consensus estimate of 5 cents a share from analysts polled by Thomson Reuters. Revenue increased 12% to $127.5 million, which beat expectations of $121.72 million and marked an increase from $113.84 million in the same period a year earlier.

Lionbridge posted fourth-quarter net profit of $6.5 million, or 10 cents a share, up from $3.3 million, or 5 cents a share, in the same quarter a year earlier.

The company forecast revenue in the range of $120 million to $123 million for the first quarter.

"The fourth quarter marked yet another quarter of strong top line growth, solid earnings expansion and increasing cash flows," said CEO Rory Cowan in the company's statement. "Our second half momentum and strong new business pipeline underscore that  we have the right strategy, the right model and the right offerings to deliver sustainable annual revenue and earnings growth. As we apply our unique crowd-in-the-cloud model to new applications and new markets, we expect ongoing growth in 2014 and beyond."

TheStreet Ratings team rates LIONBRIDGE TECHNOLOGIES INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about its recommendation:

"We rate LIONBRIDGE TECHNOLOGIES INC (LIOX) a BUY. This is driven by a number of 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The revenue growth came in higher than the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LIOX has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 22.6% when compared to the same quarter one year prior, going from $4.09 million to $5.01 million.
  • Net operating cash flow has increased to $17.21 million or 32.90% when compared to the same quarter last year. In addition, LIONBRIDGE TECHNOLOGIES INC has also modestly surpassed the industry average cash flow growth rate of 24.56%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 42.35% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: LIOX Ratings Report

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