Analysts at UBS see the talent management software provider still having solid fundamentals despite the recent pullback from the company's late February 52 week high of $61.85. The stock is set to open at $39.31 today.
"CSOD continues to have leading mindshare with HR buyers as a pure-play software as a service talent management vendor. We believe the recent downdraft creates attractive opportunity to own a top tier software as a service story with est. 2014 rev growth of 45%+ (nearly 2x software as a service median of 24%) for a very reasonable multiple," said the firm.
Separately, TheStreet Ratings team rates CORNERSTONE ONDEMAND INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CORNERSTONE ONDEMAND INC (CSOD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 45.0% when compared to the same quarter one year ago, falling from -$7.42 million to -$10.76 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, CORNERSTONE ONDEMAND INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 4.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, CSOD has managed to keep a strong quick ratio of 2.17, which demonstrates the ability to cover short-term cash needs.
- CORNERSTONE ONDEMAND INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CORNERSTONE ONDEMAND INC reported poor results of -$0.79 versus -$0.63 in the prior year. This year, the market expects an improvement in earnings (-$0.24 versus -$0.79).
- Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: CSOD Ratings Report