NEW YORK (
-- The Hackett Group
) 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 solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the ratings report include:
- The gross profit margin for HACKETT GROUP INC is currently lower than what is desirable, coming in at 33.40%. Regardless of HCKT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HCKT's net profit margin of 6.20% is significantly lower than the same period one year prior.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the IT Services industry and the overall market, HACKETT GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- HACKETT GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HACKETT GROUP INC turned its bottom line around by earning $0.34 versus -$0.18 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($0.31 versus $0.34).
- HCKT 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. To add to this, HCKT has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
- The revenue growth greatly exceeded the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 40.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
The Hackett Group, Inc. operates as a strategic advisory and technology consulting firm primarily in the United States and western Europe. The company has a P/E ratio of 11, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 16.2. The Hackett Group has a market cap of $154.8 million and is part of the
industry. Shares are up 6% year to date as of the close of trading on Monday.
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