NEW YORK ( TheStreet) -- Sykes (Nasdaq: SYKE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and compelling growth in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • SYKE's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SYKES ENTERPRISES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SYKES ENTERPRISES INC reported lower earnings of $0.42 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus $0.42).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Commercial Services & Supplies industry and the overall market, SYKES ENTERPRISES INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $14.02 million or 48.30% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Sykes Enterprises, Incorporated, together with its subsidiaries, provides outsourced customer contact management solutions and services in the business process outsourcing arena. The company has a P/E ratio of 11.6, below the average computer software & services industry P/E ratio of 49.2 and below the S&P 500 P/E ratio of 17.7. Sykes has a market cap of $578.9 million and is part of the technology sector and computer software & services industry. Shares are down 41.6% year to date as of the close of trading on Thursday.

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