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 a generally disappointing performance in the stock itself and weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 22.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EBIX's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has declined marginally to $18.29 million or 5.47% when compared to the same quarter last year. Despite a decrease in cash flow EBIX INC is still fairing well by exceeding its industry average cash flow growth rate of -25.55%.
- EBIX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.20%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Ebix, Inc. provides on-demand software and e-commerce solutions to the insurance industry. The company has a P/E ratio of 8.4, below the S&P 500 P/E ratio of 17.7. Ebix has a market cap of $562.6 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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-- Written by a member of TheStreet Ratings Staff
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