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

)

-- Bottomline Technologies

(Nasdaq:

EPAY

) 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:

  • EPAY's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 13.2%. 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.
  • 46.90% is the gross profit margin for BOTTOMLINE TECHNOLOGIES INC which we consider to be strong. Regardless of EPAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.90% trails the industry average.
  • BOTTOMLINE TECHNOLOGIES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, BOTTOMLINE TECHNOLOGIES INC reported lower earnings of $0.05 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus $0.05).
  • 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 103.9% when compared to the same quarter one year ago, falling from $30.06 million to -$1.17 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, BOTTOMLINE TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

Bottomline Technologies (de), Inc. provides cloud-based payment, invoice, and banking solutions to corporations, insurance companies, financial institutions, and banks worldwide. The company has a P/E ratio of 456.2, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Bottomline has a market cap of $838.2 million and is part of the

technology

sector and

computer software & services

industry. Shares are down 1.6% year to date as of the close of trading on Thursday.

You can view the full

Bottomline Ratings Report

or get investment ideas from our

investment research center

.

-- 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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