Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . 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 and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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Highlights from the ratings report include:
- ARBA's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ARBA 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- ARIBA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ARIBA INC swung to a loss, reporting -$0.04 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus -$0.04).
- Powered by its strong earnings growth of 92.30% and other important driving factors, this stock has surged by 84.00% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- 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. Compared to other companies in the Software industry and the overall market, ARIBA INC's return on equity significantly trails that of both the industry average and the S&P 500.
Ariba, Inc., together with its subsidiaries, provides collaborative business commerce solutions for buying and selling goods and services in the United States and internationally. The company has a P/E ratio of 1484.7, above the average internet industry P/E ratio of 890.8 and above the S&P 500 P/E ratio of 17.7. Ariba has a market cap of $4.37 billion and is part of the
industry. Shares are up 58.6% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.