NEW YORK ( TheStreet) -- LogMeIn (Nasdaq: LOGM) 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, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market on the basis of return on equity, LOGMEIN INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Net operating cash flow has increased to $8.39 million or 13.70% when compared to the same quarter last year. Despite an increase in cash flow, LOGMEIN INC's average is still marginally south of the industry average growth rate of 16.50%.
- The gross profit margin for LOGMEIN INC is currently very high, coming in at 94.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.20% is in-line with the industry average.
- LOGM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.99, which clearly demonstrates the ability to cover short-term cash needs.
- LOGM's revenue growth has slightly outpaced the industry average of 20.2%. Since the same quarter one year prior, revenues rose by 26.8%. 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.