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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link

.

NEW YORK (

TheStreet

)

-- AudioCodes

(Nasdaq:

AUDC

) has been upgraded by TheStreet Ratings from hold to buy. 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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

  • AUDC's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although AUDC's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. To add to this, AUDC has a quick ratio of 2.23, which demonstrates the ability of the company to cover short-term liquidity needs.
  • AUDIOCODES LTD reported significant earnings per share improvement 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. During the past fiscal year, AUDIOCODES LTD turned its bottom line around by earning $0.10 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.10).
  • 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 428.8% when compared to the same quarter one year prior, rising from $0.52 million to $2.77 million.
  • The gross profit margin for AUDIOCODES LTD is rather high; currently it is at 59.61%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AUDC's net profit margin of 7.64% significantly trails the industry average.

AudioCodes Ltd., together with its subsidiaries, designs, develops, and sells voice-over-IP (VoIP), and converged VoIP and data networking products and applications to service providers and enterprises worldwide. AudioCodes has a market cap of $322.3 million and is part of the technology sector and telecommunications industry. Shares are up 16.7% year to date as of the close of trading on Monday.

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AudioCodes Ratings Report

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.