NEW YORK ( TheStreet) -- Spark Networks (AMEX: LOV) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, revenue growth, expanding profit margins 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:
- Despite the fact that LOV's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.69 is high and demonstrates strong liquidity.
- Despite its growing revenue, the company underperformed as compared with the industry average of 25.7%. Since the same quarter one year prior, revenues rose by 16.6%. 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.
- SPARK NETWORKS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SPARK NETWORKS INC turned its bottom line around by earning $0.18 versus -$0.31 in the prior year.
- 38.80% is the gross profit margin for SPARK NETWORKS INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, LOV's net profit margin of -0.70% significantly underperformed when compared to the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Internet Software & Services industry and the overall market, SPARK NETWORKS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.