NEW YORK ( TheStreet) -- ORBCOMM (Nasdaq: ORBC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- ORBCOMM INC 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ORBCOMM INC continued to lose money by earning -$0.04 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.04).
- The gross profit margin for ORBCOMM INC is rather high; currently it is at 58.80%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ORBC's net profit margin of 4.00% is significantly lower than the same period one year prior.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Communications Equipment industry and the overall market, ORBCOMM INC's return on equity significantly trails that of both the industry average and the S&P 500.