NEW YORK ( TheStreet) -- Ness Technologies (Nasdaq: NSTC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • The gross profit margin for NESS TECHNOLOGIES INC is currently lower than what is desirable, coming in at 33.50%. Regardless of NSTC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NSTC's net profit margin of 1.40% is significantly lower than the same period one year prior.
  • In its most recent trading session, NSTC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 140.7% when compared to the same quarter one year prior, rising from -$4.69 million to $1.91 million.
  • NESS TECHNOLOGIES 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NESS TECHNOLOGIES INC turned its bottom line around by earning $0.22 versus -$0.26 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus $0.22).

Ness Technologies, Inc. provides information technology and business planning services in North America, Latin America, Europe, the Middle East, and Asia. The company has a P/E ratio of 22.7, above the S&P 500 P/E ratio of 16.9. Ness has a market cap of $233.4 million and is part of the technology sector and computer software & services industry. Shares are up 3.4% year to date as of the previous trading day's close.

You can view the full Ness Ratings Report or get investment ideas from our investment research center.
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