NEW YORK (

TheStreet

)

-- Emulex Corporation

(NYSE:

ELX

) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth 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 1.2%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ELX 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 3.45, which clearly demonstrates the ability to cover short-term cash needs.
  • EMULEX CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EMULEX CORP swung to a loss, reporting -$0.96 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus -$0.96).
  • 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. Compared to other companies in the Communications Equipment industry and the overall market, EMULEX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ELX has underperformed the S&P 500 Index, declining 19.19% 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.

Emulex Corporation provides network convergence solutions that connect servers, storage, and networks within the data center. Emulex has a market cap of $783.9 million and is part of the

technology

sector and

computer hardware

industry. Shares are up 35.1% year to date as of the close of trading on Friday.

You can view the full

Emulex Ratings Report

or get investment ideas from our

investment research center

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