NEW YORK ( TheStreet) -- Blackboard (Nasdaq: BBBB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$13.18 million or 463.81% 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 company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 193.1% when compared to the same quarter one year ago, falling from $4.36 million to -$4.06 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 15.3%. 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.

Blackboard Inc. provides enterprise software applications and related services to the education industry in the United States and Canada. The company has a P/E ratio of 58.3, below the average computer software & services industry P/E ratio of 187.6 and above the S&P 500 P/E ratio of 17.7. Blackboard has a market cap of $1.5 billion and is part of the technology sector and computer software & services industry. Shares are up 2.9% year to date as of the close of trading on Friday.

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