NEW YORK ( TheStreet) -- Authentidate Holding Corporation (Nasdaq: ADAT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, AUTHENTIDATE HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- AUTHENTIDATE HOLDING CORP has improved earnings per share by 33.3% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AUTHENTIDATE HOLDING CORP continued to lose money by earning -$0.25 versus -$0.27 in the prior year. For the next year, the market is expecting a contraction of 16.0% in earnings (-$0.29 versus -$0.25).
- The net income growth from the same quarter one year ago has exceeded that of the Software industry average, but is less than that of the S&P 500. The net income increased by 28.5% when compared to the same quarter one year prior, rising from -$2.27 million to -$1.62 million.
- Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 63.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 16.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.