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) -- WNS holdings (NYSE: WNS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, 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 lackluster performance in the stock itself.
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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 IT Services industry. The net income increased by 26.0% when compared to the same quarter one year prior, rising from $3.43 million to $4.32 million.
- WNS's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- WNS (HOLDINGS) LTD -ADR reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WNS (HOLDINGS) LTD -ADR increased its bottom line by earning $0.27 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.27).
- 36.60% is the gross profit margin for WNS (HOLDINGS) LTD -ADR which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WNS's net profit margin of 3.80% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.9%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
-- Written by a member of TheStreet Ratings Staff