NEW YORK (TheStreet) -- Progress Software (PRGS - Get Report) shares rose 8.4% to $24.12 on Friday, a day after the company released positive second quarter earnings results.
The software company reported a year over year 37% earnings increase to 37 cents per diluted share on revenue of $80.4 million, ahead of analysts' $78.4 million estimates.
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TheStreet Ratings team rates PROGRESS SOFTWARE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROGRESS SOFTWARE CORP (PRGS) 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 impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that net income has been generally deteriorating over time."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PROGRESS SOFTWARE CORP has improved earnings per share by 23.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PROGRESS SOFTWARE CORP increased its bottom line by earning $0.73 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $0.73).
- PRGS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, PRGS has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for PROGRESS SOFTWARE CORP is currently very high, coming in at 93.37%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PRGS's net profit margin of 14.89% significantly trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Software industry and the overall market, PROGRESS SOFTWARE CORP's return on equity is below that of both the industry average and the S&P 500.
- 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 Software industry. The net income has significantly decreased by 64.3% when compared to the same quarter one year ago, falling from $31.12 million to $11.10 million.
- You can view the full analysis from the report here: PRGS Ratings Report