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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 28.5%. 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.
- MSTR 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for MICROSTRATEGY INC is currently very high, coming in at 78.10%. Regardless of MSTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MSTR's net profit margin of 2.10% is significantly lower than the same period one year prior.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 75.2% when compared to the same quarter one year ago, falling from $11.62 million to $2.89 million.
- Net operating cash flow has decreased to $3.26 million or 49.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
MicroStrategy Incorporated provides business intelligence (BI) software worldwide. It offers MicroStrategy nine, an integrated BI platform that enables businesses to make business decisions. The company has a P/E ratio of 41.9, below the average computer software & services industry P/E ratio of 42 and above the S&P 500 P/E ratio of 17.7. MicroStrategy has a market cap of $881.1 million and is part of the
industry. Shares are up 32.7% year to date as of the close of trading on Wednesday.
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