LoopNet Inc. Stock Downgraded (LOOP)
NEW YORK (
)
-- LoopNet
(Nasdaq:
) has been downgraded by TheStreet Ratings from buy 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- LOOP's revenue growth trails the industry average of 25.8%. Since the same quarter one year prior, revenues rose by 12.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LOOP 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 5.78, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to its closing price of one year ago, LOOP's share price has jumped by 52.94%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, LOOPNET INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $6.27 million or 12.46% 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.
LoopNet, Inc. owns and operates an online marketplace for commercial real estate in the United States. The company has a P/E ratio of 35.7, below the average real estate industry P/E ratio of 62 and above the S&P 500 P/E ratio of 17.7. LoopNet has a market cap of $564.3 million and is part of the
sector and
industry. Shares are down 13.2% year to date as of the close of trading on Thursday.
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