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) -- 8x8 (Nasdaq: EGHT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.
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- The revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 33.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, 8X8 INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for 8X8 INC is currently very high, coming in at 71.50%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.60% trails the industry average.
- 8X8 INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, 8X8 INC increased its bottom line by earning $0.95 versus $0.10 in the prior year. For the next year, the market is expecting a contraction of 78.9% in earnings ($0.20 versus $0.95).
-- Written by a member of TheStreet Ratings Staff