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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 33.2%. 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.
- Although DTLK's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
- Compared to its closing price of one year ago, DTLK's share price has jumped by 69.29%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- DATALINK CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, DATALINK CORP's EPS of $0.59 remained unchanged from the prior years' EPS of $0.59. This year, the market expects an improvement in earnings ($0.91 versus $0.59).
- 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 Computers & Peripherals industry. The net income has significantly decreased by 56.9% when compared to the same quarter one year ago, falling from $1.92 million to $0.83 million.
Datalink Corporation engages in the design, installation, and support of data center solutions to mid and large-size companies. The company has a P/E ratio of 33.7, above the S&P 500 P/E ratio of 17.7. Datalink has a market cap of $336.2 million and is part of the technology sector and computer hardware industry. Shares are up 36.1% year to date as of the close of trading on Monday.
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