NEW YORK ( TheStreet) -- Blue Coat Systems (Nasdaq: BCSI) 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- BCSI's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.63, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for BLUE COAT SYSTEMS INC is currently very high, coming in at 80.60%. Regardless of BCSI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCSI's net profit margin of 4.00% is significantly lower than the same period one year prior.
- BCSI, with its decline in revenue, underperformed when compared the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 5.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- BLUE COAT SYSTEMS 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 reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BLUE COAT SYSTEMS INC increased its bottom line by earning $0.97 versus $0.92 in the prior year. For the next year, the market is expecting a contraction of 12.4% in earnings ($0.85 versus $0.97).
- 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 Communications Equipment industry. The net income has significantly decreased by 61.9% when compared to the same quarter one year ago, falling from $12.03 million to $4.59 million.