NEW YORK ( TheStreet) -- Blackboard (Nasdaq: BBBB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.35 is very low and demonstrates very weak liquidity.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The gross profit margin for BLACKBOARD INC is currently very high, coming in at 70.50%. Regardless of BBBB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBBB's net profit margin of -2.80% significantly underperformed when compared to the industry average.
- BLACKBOARD INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BLACKBOARD INC increased its bottom line by earning $0.48 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $0.48).
- The revenue growth came in higher than the industry average of 1.2%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.