NEW YORK ( TheStreet) -- Progress Software (Nasdaq: PRGS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- PRGS'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, PRGS has a quick ratio of 1.70, which demonstrates the ability of the company to cover short-term liquidity needs.
- PROGRESS SOFTWARE 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, PROGRESS SOFTWARE CORP increased its bottom line by earning $0.86 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.86).
- PRGS, with its decline in revenue, underperformed when compared the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of PROGRESS SOFTWARE CORP has not done very well: it is down 20.67% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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 Software industry. The net income has significantly decreased by 63.5% when compared to the same quarter one year ago, falling from $20.52 million to $7.49 million.
-- Written by a member of TheStreet Ratings Staff