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 (

TheStreet

)

-- Pervasive Software

(Nasdaq:

PVSW

) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

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Highlights from the ratings report include:

  • PVSW's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PVSW 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 3.90, which clearly demonstrates the ability to cover short-term cash needs.
  • PERVASIVE SOFTWARE INC 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, PERVASIVE SOFTWARE INC reported lower earnings of $0.10 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.10).
  • 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. Compared to other companies in the Software industry and the overall market, PERVASIVE SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.69 million or 155.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

TheStreet Recommends

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Pervasive Software Inc. delivers software to manage, integrate, and analyze data in the cloud or on-premises throughout the data lifecycle. The company has a P/E ratio of 85, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Pervasive Software has a market cap of $140.8 million and is part of the technology sector and computer software & services industry. Shares are up 46% year to date as of the close of trading on Wednesday.

You can view the full

Pervasive Software Ratings Report

or get investment ideas from our

investment research center

.

-- Written by a member of TheStreet Ratings Staff

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