NEW YORK ( TheStreet) -- LogMeIn (Nasdaq: LOGM) 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 good cash flow from operations. 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.
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- LOGM's revenue growth trails the industry average of 35.4%. Since the same quarter one year prior, revenues rose by 16.1%. 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.
- LOGM 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 2.64, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for LOGMEIN INC is currently very high, coming in at 93.80%. Regardless of LOGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LOGM's net profit margin of 1.70% is significantly lower than the same period one year prior.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, LOGMEIN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.11%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 81.81% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, LOGM is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff