NEW YORK (TheStreet) -- Zix Corp (ZIXI - Get Report) stock is gaining Thursday on the news it will launch Google Apps Message Encryption (GAME), a program specifically designed at the request of Google (GOOG - Get Report) for the Google Apps infrastructure. The tool provides secure email to Google Apps users.
"Emails sent to users on other email systems such as Yahoo and Microsoft Exchange are vulnerable as they traverse the public Internet. GAME allows encryption of email to every possible recipient, giving Google Apps customers the confidence that they are protecting the sensitive information of their customers and partners," the companies said in a joint statement.
By late afternoon, shares were up 9% to $3.39.
"We rate ZIX CORP (ZIXI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share."
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 Internet Software & Services industry. The net income increased by 86.8% when compared to the same quarter one year prior, rising from $0.57 million to $1.06 million.
- ZIXI's revenue growth trails the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for ZIX CORP is currently very high, coming in at 83.35%. Regardless of ZIXI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZIXI's net profit margin of 8.70% is significantly lower than the industry average.
- ZIX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, ZIX CORP's EPS of $0.17 remained unchanged from the prior years' EPS of $0.17. For the next year, the market is expecting a contraction of 5.9% in earnings ($0.16 versus $0.17).
- ZIXI has underperformed the S&P 500 Index, declining 14.17% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: ZIXI Ratings Report