NEW YORK ( TheStreet) -- Procera Networks (Nasdaq: PKT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation. Highlights from the ratings report include:
- PKT's very impressive revenue growth greatly exceeded the industry average of 20.5%. Since the same quarter one year prior, revenues leaped by 78.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PKT 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 4.10, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for PROCERA NETWORKS INC is currently very high, coming in at 70.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PKT's net profit margin of 4.70% significantly trails the industry average.
- 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. When compared to other companies in the Communications Equipment industry and the overall market, PROCERA NETWORKS INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff