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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 26.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PRO 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 2.56, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for PROS HOLDINGS INC is currently very high, coming in at 72.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PRO's net profit margin of 4.40% significantly trails the industry average.
- After a year of stock price fluctuations, the net result is that PRO's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- Net operating cash flow has decreased to $3.42 million or 42.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
PROS Holdings, Inc. provides pricing and revenue management software for manufacturing, distribution, services, and travel industries. The company offers PROS Pricing Solution Suite, a set of integrated software solutions that enable enterprises to apply pricing and revenue management science. The company has a P/E ratio of 72.3, below the average computer software & services industry P/E ratio of 75.4 and above the S&P 500 P/E ratio of 17.7. Pros has a market cap of $474.3 million and is part of the
industry. Shares are up 21.7% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff