NEW YORK ( TheStreet) -- Virtusa Corporation (Nasdaq: VRTU) 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, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 3517.51% to $6.40 million when compared to the same quarter last year. In addition, VIRTUSA CORP has also vastly surpassed the industry average cash flow growth rate of -7.59%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 45.9% when compared to the same quarter one year prior, rising from $3.58 million to $5.23 million.
  • VIRTUSA CORP has improved earnings per share by 40.0% 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, VIRTUSA CORP increased its bottom line by earning $0.66 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.66).
  • VRTU's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.07, which clearly demonstrates the ability to cover short-term cash needs.
  • VRTU's revenue growth has slightly outpaced the industry average of 14.5%. Since the same quarter one year prior, revenues rose by 21.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Virtusa Corporation provides information technology (IT) services to clients across North America, Europe, the Middle East, and Asia. The company has a P/E ratio of 27.7, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Virtusa has a market cap of $464.8 million and is part of the technology sector and computer software & services industry. Shares are up 11.6% year to date as of the close of trading on Tuesday.

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