Acacia Research Coroporation Stock Downgraded (ACTG)

NEW YORK ( TheStreet) -- Acacia Research Coroporation (Nasdaq: ACTG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, robust revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation.

Highlights from the ratings report include:
  • Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.81 is very high and demonstrates very strong liquidity.
  • ACTG's very impressive revenue growth greatly exceeded the industry average of 9.9%. Since the same quarter one year prior, revenues leaped by 58.7%. 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.
  • Compared to its closing price of one year ago, ACTG's share price has jumped by 30.65%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Net operating cash flow has declined marginally to $13.26 million or 8.99% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Acacia Research Corporation, through its subsidiaries, acquires, develops, licenses, and enforces patented technologies in the United States. Acacia Research Coroporation has a market cap of $1.73 billion and is part of the services sector and diversified services industry. Shares are up 7.7% year to date as of the close of trading on Monday.

You can view the full Acacia Research Coroporation Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff