NEW YORK ( TheStreet) -- Edgewater Technology (Nasdaq: EDGW) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.
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- Compared to its closing price of one year ago, EDGW's share price has jumped by 57.70%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- EDGW 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. To add to this, EDGW has a quick ratio of 1.80, which demonstrates the ability of the company to cover short-term liquidity needs.
- EDGEWATER TECHNOLOGY INC 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, EDGEWATER TECHNOLOGY INC turned its bottom line around by earning $0.02 versus -$1.93 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus $0.02).
- The gross profit margin for EDGEWATER TECHNOLOGY INC is currently lower than what is desirable, coming in at 34.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.50% significantly trails the industry average.
- 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 IT Services industry. The net income has significantly decreased by 66.1% when compared to the same quarter one year ago, falling from $0.40 million to $0.13 million.
-- Written by a member of TheStreet Ratings Staff