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NEW YORK (TheStreet) -- SPS Commerce Inc (SPSC) - Get SPS Commerce, Inc. Report has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SPS COMMERCE INC (SPSC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 210.4% when compared to the same quarter one year prior, rising from $0.27 million to $0.84 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 28.6%. Since the same quarter one year prior, revenues rose by 20.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SPSC 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 7.39, which clearly demonstrates the ability to cover short-term cash needs.
- SPS COMMERCE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, SPS COMMERCE INC reported lower earnings of $0.07 versus $0.08 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.07).
- The gross profit margin for SPS COMMERCE INC is currently very high, coming in at 73.73%. Regardless of SPSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SPSC's net profit margin of 2.57% is significantly lower than the industry average.
- You can view the full analysis from the report here: SPSC Ratings Report