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, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 20.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 2820.3% when compared to the same quarter one year prior, rising from -$1.53 million to $41.62 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NUAN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.59 is high and demonstrates strong liquidity.
- 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 Software industry and the overall market, NUANCE COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
Nuance Communications, Inc. provides voice and language solutions for businesses and consumers worldwide. The company has a P/E ratio of 123.7, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Nuance has a market cap of $5.3 billion and is part of the
industry. Shares are down 5% year to date as of the close of trading on Thursday.
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