NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. 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 increase in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 16.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DGIT 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 4.93, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for DG FASTCHANNEL INC is rather high; currently it is at 66.20%. Regardless of DGIT'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 15.10% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Communications Equipment industry and the overall market, DG FASTCHANNEL INC's return on equity is below that of both the industry average and the S&P 500.
- DGIT has underperformed the S&P 500 Index, declining 24.83% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
DG FastChannel, Inc. provides digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers, and other media outlets. The company has a P/E ratio of 11.5, below the average diversified services industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. DG FastChannel has a market cap of $537.9 million and is part of the
industry. Shares are down 29.3% year to date as of the close of trading on Monday.
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