NEW YORK ( TheStreet) -- TNS (NYSE: TNS) 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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally poor debt management. Highlights from the ratings report include:
- TNS's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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.
- TNS 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, TNS INC increased its bottom line by earning $0.75 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($2.47 versus $0.75).
- The debt-to-equity ratio is very high at 3.26 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, TNS has managed to keep a strong quick ratio of 1.55, which demonstrates the ability to cover short-term cash needs.
- 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 645.6% when compared to the same quarter one year ago, falling from $0.71 million to -$3.85 million.
-- Written by a member of TheStreet Ratings Staff