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 reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- EMC's revenue growth trails the industry average of 27.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $1,437.87 million or 11.77% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.85%.
- EMC CORP/MA's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EMC CORP/MA increased its bottom line by earning $1.10 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.10).
- The gross profit margin for EMC CORP/MA is rather high; currently it is at 69.60%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EMC's net profit margin of 11.90% significantly trails the industry average.
- Although EMC's debt-to-equity ratio of 0.08 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 0.89 is somewhat weak and could be cause for future problems.
EMC Corporation develops, delivers, and supports the information and virtual infrastructure technologies and solutions. EMC has a market cap of $51.76 billion and is part of the technology sector and computer hardware industry. The company has a P/E ratio of 20.1, above the S&P 500 P/E ratio of 17.7. Shares are up 15.4% 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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