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) -- HomeAway (Nasdaq: AWAY) 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, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. 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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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 31.7% when compared to the same quarter one year prior, rising from $2.17 million to $2.86 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 24.4%. Since the same quarter one year prior, revenues rose by 22.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Compared to other companies in the Internet & Catalog Retail industry and the overall market, HOMEAWAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for HOMEAWAY INC is currently very high, coming in at 85.50%. Regardless of AWAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AWAY's net profit margin of 4.00% compares favorably to the industry average.
- AWAY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.05%, which is also worse than the performance of the S&P 500 Index. 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, AWAY is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff