Procera Networks Inc. Stock Upgraded (PKT)

NEW YORK ( TheStreet) -- Procera Networks (Nasdaq: PKT) has been upgraded by TheStreet Ratings from hold to buy. 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • PKT's very impressive revenue growth greatly exceeded the industry average of 21.8%. 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.
  • PROCERA NETWORKS 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. During the past fiscal year, PROCERA NETWORKS INC turned its bottom line around by earning $0.25 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus $0.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 351.7% when compared to the same quarter one year prior, rising from -$0.23 million to $0.58 million.
  • Net operating cash flow has significantly increased by 52.33% to $3.65 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.70%.

Procera Networks, Inc. provides intelligent policy enforcement solutions based on deep packet inspection technology that enable mobile and broadband network operators and entities to manage private networks. The company has a P/E ratio of 60.9, below the average computer software & services industry P/E ratio of 66.8 and above the S&P 500 P/E ratio of 17.7. Procera has a market cap of $398.9 million and is part of the technology sector and computer software & services industry. Shares are up 29.2% year to date as of the close of trading on Wednesday.

You can view the full Procera Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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