NEW YORK ( TheStreet) -- WNS holdings (NYSE: WNS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures 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:
- Compared to its closing price of one year ago, WNS's share price has jumped by 25.41%, exceeding the performance of the broader market during that same time frame.
- Net operating cash flow has significantly increased by 386.56% to $21.73 million when compared to the same quarter last year. In addition, WNS (HOLDINGS) LTD -ADR has also vastly surpassed the industry average cash flow growth rate of 3.04%.
- WNS (HOLDINGS) LTD -ADR's earnings per share declined by 27.3% 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, WNS (HOLDINGS) LTD -ADR increased its bottom line by earning $0.21 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.21).
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that WNS's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
- The revenue fell significantly faster than the industry average of 7.2%. Since the same quarter one year prior, revenues fell by 23.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.