NEW YORK ( TheStreet) -- AutoNavi Holdings (Nasdaq: AMAP) has been upgraded by TheStreet Ratings from sell 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 40.3%. 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.
- AMAP 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 5.69, which clearly demonstrates the ability to cover short-term cash needs.
- AUTONAVI HLDG LTD's earnings per share declined by 10.0% in the most recent quarter compared to 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, AUTONAVI HLDG LTD increased its bottom line by earning $0.73 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.73).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Software industry average. The net income has decreased by 15.9% when compared to the same quarter one year ago, dropping from $10.62 million to $8.93 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, AUTONAVI HLDG LTD'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