NEW YORK ( TheStreet) -- VanceInfo Technologies (NYSE: VIT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 25.7%. 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.
- VIT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.23, which clearly demonstrates the ability to cover short-term cash needs.
- VANCEINFO TECHNOLOGIES -ADR 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 reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VANCEINFO TECHNOLOGIES -ADR increased its bottom line by earning $0.69 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.69).
- 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 Software industry. The net income has significantly decreased by 58.6% when compared to the same quarter one year ago, falling from $7.71 million to $3.19 million.
- 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. In comparison to the other companies in the Software industry and the overall market, VANCEINFO TECHNOLOGIES -ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.