NEW YORK ( TheStreet) -- Brocade Communications Systems (Nasdaq: BRCD) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 117.6% when compared to the same quarter one year prior, rising from $26.92 million to $58.58 million.
- BRCD's revenue growth trails the industry average of 17.1%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for BROCADE COMMUNICATIONS SYS is rather high; currently it is at 67.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BRCD's net profit margin of 10.40% significantly trails the industry average.
- Net operating cash flow has slightly increased to $127.05 million or 7.45% when compared to the same quarter last year. Despite an increase in cash flow of 7.45%, BROCADE COMMUNICATIONS SYS is still growing at a significantly lower rate than the industry average of 107.23%.
- BROCADE COMMUNICATIONS SYS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BROCADE COMMUNICATIONS SYS reported lower earnings of $0.10 versus $0.26 in the prior year. This year, the market expects an improvement in earnings ($0.58 versus $0.10).
-- Written by a member of TheStreet RatingsStaff