Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- RPXC's revenue growth has slightly outpaced the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 16.9%. 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.
- RPXC's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RPXC has a quick ratio of 2.30, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for RPX CORP is currently very high, coming in at 98.71%. It has increased significantly from the same period last year. Along with this, the net profit margin of 11.60% is above that of the industry average.
- Net operating cash flow has significantly increased by 422.28% to $55.95 million when compared to the same quarter last year. In addition, RPX CORP has also vastly surpassed the industry average cash flow growth rate of -7.12%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
RPX Corporation provides patent risk management solutions in the United States, Japan, and internationally. It offers a subscription-based patent risk management solution that facilitates exchanges of value between owners and users of patents. The company has a P/E ratio of 21.4, above the S&P 500 P/E ratio of 17.7. RPX has a market cap of $868.7 million and is part of the services sector and diversified services industry. Shares are down 2.8% year to date as of the close of trading on Thursday.
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