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 growth in earnings per share, increase in net income, notable return on equity, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- WEBSENSE 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 two years. We feel that this trend should continue. During the past fiscal year, WEBSENSE INC increased its bottom line by earning $0.78 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $0.78).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 80.9% when compared to the same quarter one year prior, rising from $4.38 million to $7.92 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Software industry and the overall market, WEBSENSE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $9.88 million or 7.92% when compared to the same quarter last year. Despite an increase in cash flow, WEBSENSE INC's average is still marginally south of the industry average growth rate of 17.85%.
- The gross profit margin for WEBSENSE INC is currently very high, coming in at 89.20%. Regardless of WBSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WBSN's net profit margin of 8.80% compares favorably to the industry average.
Websense, Inc. provides Web, email, and data security solutions to protect an organization's data and users from cyber-threats, malware attacks, information leaks, legal liability, and productivity loss worldwide. The company has a P/E ratio of 20.5, below the average diversified services industry P/E ratio of 32 and above the S&P 500 P/E ratio of 17.7. Websense has a market cap of $618.8 million and is part of the
industry. Shares are down 18.7% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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.