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) -- Epiq Systems (Nasdaq: EPIQ) 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, reasonable valuation levels, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth came in higher than the industry average of 6.2%. 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.
- 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 86.0% when compared to the same quarter one year prior, rising from $2.77 million to $5.16 million.
- Net operating cash flow has significantly increased by 1859.89% to $23.48 million when compared to the same quarter last year. In addition, EPIQ SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of 19.59%.
- EPIQ's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that EPIQ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
-- Written by a member of TheStreet Ratings Staff