NEW YORK ( TheStreet) -- InfoSpace (Nasdaq: INSP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, INFOSPACE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to -$5.32 million or 199.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 35.60% is the gross profit margin for INFOSPACE INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, INSP's net profit margin of 3.50% significantly trails the industry average.
- INFOSPACE INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, INFOSPACE INC increased its bottom line by earning $0.37 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.37).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.