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ORBCOMM Inc. Stock Upgraded (ORBC)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK (TheStreet) -- ORBCOMM (Nasdaq:ORBC) 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

  • 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:

  • The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 18.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • ORBC's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.32, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, ORBC's share price has jumped by 56.53%, exceeding the performance of the broader market during that same time frame. 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.
  • The gross profit margin for ORBCOMM INC is rather high; currently it is at 56.08%. Regardless of ORBC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORBC's net profit margin of 4.25% is significantly lower than the industry average.
  • ORBCOMM INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ORBCOMM INC reported lower earnings of $0.09 versus $0.18 in the prior year. This year, the market expects earnings to be in line with last year ($0.09 versus $0.09).

ORBCOMM Inc., a wireless data communications company, operates commercial wireless messaging system optimized for narrowband data communications primarily in the United States and Japan. ORBCOMM has a market cap of $421.6 million and is part of the technology sector and telecommunications industry. Shares are up 24.4% year to date as of the close of trading on Monday.

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

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