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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 (

TheStreet

)

-- AudioCodes

(Nasdaq:

AUDC

) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. 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:

  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 76.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although AUDC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 104.6% when compared to the same quarter one year prior, rising from -$1.56 million to $0.07 million.
  • AUDIOCODES LTD 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, AUDIOCODES LTD swung to a loss, reporting -$0.11 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$0.11).
  • AUDC, with its decline in revenue, underperformed when compared the industry average of 15.8%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Communications Equipment industry and the overall market, AUDIOCODES LTD's return on equity significantly trails that of both the industry average and the S&P 500.

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AudioCodes Ltd. AudioCodes has a market cap of $157.2 million and is part of the technology sector and telecommunications industry. Shares are up 28.6% year to date as of the close of trading on Monday.

You can view the full

AudioCodes Ratings Report

or get investment ideas from our

investment research center

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-- Written by a member of TheStreet Ratings Staff

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

.

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