NEW YORK ( TheStreet) -- Epiq Systems (Nasdaq: EPIQ) 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, reasonable valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.
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- The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 32.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EPIQ SYSTEMS INC reported significant earnings per share improvement 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, EPIQ SYSTEMS INC reported lower earnings of $0.33 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.33).
- EPIQ has underperformed the S&P 500 Index, declining 18.51% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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. Compared to other companies in the Software industry and the overall market, EPIQ SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff