NEW YORK ( TheStreet) -- Websense (Nasdaq: WBSN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- 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. Compared to other companies in the Software industry and the overall market on the basis of return on equity, WEBSENSE INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for WEBSENSE INC is currently very high, coming in at 94.70%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, WBSN's net profit margin of 10.30% significantly trails the industry average.
- 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 180.9% when compared to the same quarter one year prior, rising from -$11.02 million to $8.92 million.
- 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 turned its bottom line around by earning $0.43 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $0.43).
- The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.