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 (
) 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 26.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although EBIX's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
- EBIX has underperformed the S&P 500 Index, declining 21.77% 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.
- Net operating cash flow has decreased to $19.28 million or 12.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
Ebix, Inc. provides on-demand software and e-commerce solutions to the insurance industry. The company has a P/E ratio of 9.7, below the S&P 500 P/E ratio of 17.7. Ebix has a market cap of $638.2 million and is part of the technology sector and computer software & services industry. Shares are down 22.5% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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