NEW YORK ( TheStreet) -- Digimarc Corporation (Nasdaq: DMRC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- DMRC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 8.07, which clearly demonstrates the ability to cover short-term cash needs.
- DIGIMARC CORP 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, DIGIMARC CORP increased its bottom line by earning $0.77 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.77).
- DMRC, with its decline in revenue, underperformed when compared the industry average of 1.3%. Since the same quarter one year prior, revenues fell by 14.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for DIGIMARC CORP is currently very high, coming in at 81.20%. Regardless of DMRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DMRC's net profit margin of 5.10% is significantly lower than the same period one year prior.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Software industry and the overall market, DIGIMARC CORP's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff