NEW YORK ( TheStreet) -- CSG Systems International (Nasdaq: CSGS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 36.7%. 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.
- Net operating cash flow has significantly increased by 63.83% to $30.31 million when compared to the same quarter last year. In addition, CSG SYSTEMS INTL INC has also vastly surpassed the industry average cash flow growth rate of 3.86%.
- The gross profit margin for CSG SYSTEMS INTL INC is rather high; currently it is at 54.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CSGS's net profit margin of 5.70% significantly trails the industry average.
- CSG SYSTEMS INTL INC's earnings per share declined by 8.6% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CSG SYSTEMS INTL INC reported lower earnings of $0.68 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $0.68).
- The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, CSGS has managed to keep a strong quick ratio of 1.99, which demonstrates the ability to cover short-term cash needs.
-- Written by a member of TheStreet RatingsStaff