NEW YORK ( TheStreet) -- Salesforce.com (NYSE: CRM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
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- The revenue growth greatly exceeded the industry average of 4.1%. Since the same quarter one year prior, revenues rose by 37.9%. 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.
- Net operating cash flow has significantly increased by 52.82% to $213.21 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.76%.
- Although CRM's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Despite the fact that CRM's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
- 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 Software industry. The net income has significantly decreased by 3774.5% when compared to the same quarter one year ago, falling from $0.53 million to -$19.48 million.
- 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 Software industry and the overall market, SALESFORCE.COM 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.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.