NEW YORK ( TheStreet) -- MDC Partners (Nasdaq: MDCA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 5.98 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MDCA maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has significantly decreased to -$33.28 million or 196.87% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The net income growth from the same quarter one year ago has exceeded that of the Media industry average, but is less than that of the S&P 500. The net income increased by 14.7% when compared to the same quarter one year prior, going from -$10.19 million to -$8.69 million.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 40.76% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
- MDCA's very impressive revenue growth greatly exceeded the industry average of 11.4%. Since the same quarter one year prior, revenues leaped by 60.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.