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 (
) 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, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 32.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- AWRE 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 this, the company maintains a quick ratio of 28.28, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 87.28% to $1.21 million when compared to the same quarter last year. In addition, AWARE INC has also vastly surpassed the industry average cash flow growth rate of 10.43%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The gross profit margin for AWARE INC is rather high; currently it is at 66.25%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, AWRE's net profit margin of 13.29% is significantly lower than the industry average.
Aware, Inc. develops and sells software and services to the biometrics industry. Its products are used in government and commercial biometrics systems, which are capable of determining or verifying an individual's identity. Aware has a market cap of $129 million and is part of the technology sector and computer software & services industry. Shares are down 5.9% year to date as of the close of trading on Wednesday.
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