8x8 Inc. Stock Upgraded (EGHT)

NEW YORK ( TheStreet) -- 8x8 (Nasdaq: EGHT) 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, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 30.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EGHT's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EGHT has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 70.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • 8X8 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, 8X8 INC increased its bottom line by earning $0.10 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($0.11 versus $0.10).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 72.9% when compared to the same quarter one year prior, rising from $1.50 million to $2.59 million.
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8x8, Inc. develops and markets telecommunications services for Internet protocol (IP), telephony, and video applications. The company has a P/E ratio of 41.4, below the average telecommunications industry P/E ratio of 47.7 and above the S&P 500 P/E ratio of 17.7. 8x8 has a market cap of $298.3 million and is part of the technology sector and telecommunications industry. Shares are up 40.4% year to date as of the close of trading on Wednesday.

You can view the full 8x8 Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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