Editor's Note: 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 NEW YORK ( TheStreet) -- Opentable (Nasdaq: OPEN) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- OPEN's revenue growth trails the industry average of 36.1%. Since the same quarter one year prior, revenues rose by 15.4%. 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.
- OPEN 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, OPEN has a quick ratio of 2.43, which demonstrates the ability of the company to cover short-term liquidity needs.
- OPENTABLE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, OPENTABLE INC increased its bottom line by earning $0.89 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $0.89).
- The gross profit margin for OPENTABLE INC is currently very high, coming in at 81.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.50% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market on the basis of return on equity, OPENTABLE INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff