NEW YORK ( TheStreet) -- Eaton Vance Corporation (NYSE: EV) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 19.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EATON VANCE CORP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, EATON VANCE CORP increased its bottom line by earning $1.41 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.82 versus $1.41).
  • Even though the current debt-to-equity ratio is 1.05, it is still below the industry average, suggesting that this level of debt is acceptable within the Capital Markets industry.
  • Net operating cash flow has significantly decreased to -$5.65 million or 118.29% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, EATON VANCE CORP has marginally lower results.
  • EV's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.96%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, EV is still more expensive than most of the other companies in its industry.

Eaton Vance Corp., through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. The company has a P/E ratio of 15.4, equal to the average financial services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Eaton Vance has a market cap of $2.8 billion and is part of the financial sector and financial services industry. Shares are down 25.2% year to date as of the close of trading on Thursday.

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

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