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) -- Sourcefire (Nasdaq: FIRE) 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, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth greatly exceeded the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 38.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- FIRE 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 2.91, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 378.9% when compared to the same quarter one year prior, rising from -$0.40 million to $1.11 million.
- Net operating cash flow has significantly increased by 135.86% to $2.63 million when compared to the same quarter last year. In addition, SOURCEFIRE INC has also vastly surpassed the industry average cash flow growth rate of 19.63%.
- Powered by its strong earnings growth of 500.00% and other important driving factors, this stock has surged by 102.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
-- Written by a member of TheStreet Ratings Staff