NEW YORK ( TheStreet) -- XO Group (NYSE: XOXO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, 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:
- XO GROUP 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. During the past fiscal year, XO GROUP INC increased its bottom line by earning $0.21 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus $0.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 68.2% when compared to the same quarter one year prior, rising from $1.51 million to $2.55 million.
- XOXO's revenue growth trails the industry average of 24.8%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- XOXO 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 3.77, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for XO GROUP INC is currently very high, coming in at 81.60%. Regardless of XOXO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, XOXO's net profit margin of 8.20% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet RatingsStaff