NEW YORK ( TheStreet) -- Edgewater Technology (Nasdaq: EDGW) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.1%. Since the same quarter one year prior, revenues rose by 12.2%. 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.
- EDGW'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, EDGW has a quick ratio of 1.92, which demonstrates the ability of the company to cover short-term liquidity needs.
- EDGEWATER TECHNOLOGY INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, EDGEWATER TECHNOLOGY INC turned its bottom line around by earning $0.02 versus -$1.93 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus $0.02).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, EDGEWATER TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the IT Services industry. The net income has significantly decreased by 1114.0% when compared to the same quarter one year ago, falling from -$0.16 million to -$1.91 million.
-- Written by a member of TheStreet Ratings Staff