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) -- NetApp (Nasdaq: NTAP) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Although NTAP's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for NETAPP INC is rather high; currently it is at 64.60%. Regardless of NTAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NTAP's net profit margin of 4.40% is significantly lower than the same period one year prior.
- NETAPP INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NETAPP INC reported lower earnings of $1.57 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.57).
- NTAP, with its decline in revenue, underperformed when compared the industry average of 23.4%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, NTAP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
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