NEW YORK ( TheStreet) -- Spark Networks (AMEX: LOV) has been downgraded by TheStreet Ratings from buy to hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow. 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 25.8%. 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.
- 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 Internet Software & Services industry. The net income has significantly decreased by 108.8% when compared to the same quarter one year ago, falling from $0.92 million to -$0.08 million.
- Net operating cash flow has significantly decreased to -$0.24 million or 109.81% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.