NEW YORK ( TheStreet) -- Stream Global Services (AMEX: SGS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally poor debt management. Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- STREAM GLOBAL SERVICES 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. This trend suggests that the performance of the business is improving. During the past fiscal year, STREAM GLOBAL SERVICES INC continued to lose money by earning -$0.31 versus -$0.67 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$0.31).
- 43.00% is the gross profit margin for STREAM GLOBAL SERVICES INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SGS's net profit margin of 1.90% significantly trails the industry average.
- The debt-to-equity ratio of 1.22 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SGS has managed to keep a strong quick ratio of 1.57, which demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has decreased to $3.88 million or 49.39% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet RatingsStaff