NEW YORK ( TheStreet) -- Datawatch Corporation (Nasdaq: DWCH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- DWCH's very impressive revenue growth greatly exceeded the industry average of 0.3%. Since the same quarter one year prior, revenues leaped by 50.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DWCH 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. To add to this, DWCH has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 165.43% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DWCH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 163.3% when compared to the same quarter one year prior, rising from $0.23 million to $0.60 million.
- The gross profit margin for DATAWATCH CORP is currently very high, coming in at 80.20%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, DWCH's net profit margin of 9.60% significantly trails the industry average.