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) -- Descartes Systems Group (Nasdaq: DSGX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
- ACTIVE STOCK TRADERS: Get full access to Jim Cramer's thoughts for less than $3/week - sometimes before he says them on TV! Start with a 14-Day Free Trial.
- Compared to its closing price of one year ago, DSGX's share price has jumped by 43.68%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DSGX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- DSGX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DSGX has a quick ratio of 2.44, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $6.56 million or 43.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.70%.
- The gross profit margin for DESCARTES SYSTEMS GROUP INC is rather high; currently it is at 67.20%. Regardless of DSGX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DSGX's net profit margin of 8.10% compares favorably to the industry average.
-- Written by a member of TheStreet Ratings Staff