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) -- Marchex (Nasdaq: MCHX) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- MARCHEX INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MARCHEX INC turned its bottom line around by earning $0.06 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.06).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 178.9% when compared to the same quarter one year prior, rising from $0.14 million to $0.40 million.
- 46.00% is the gross profit margin for MARCHEX INC which we consider to be strong. Regardless of MCHX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCHX's net profit margin of 1.20% is significantly lower than the same period one year prior.
- 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, MARCHEX INC's return on equity significantly trails that of both the industry average and the S&P 500.
- This stock's share value has moved by only 62.53% over the past year. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, MCHX is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff