Citrix Systems Inc. Stock Buy Recommendation Reiterated (CTXS)

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) -- Citrix Systems (Nasdaq: CTXS) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CTXS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • CITRIX SYSTEMS INC's earnings per share declined by 16.3% in the most recent quarter compared to the same quarter a year ago. 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, CITRIX SYSTEMS INC increased its bottom line by earning $1.88 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $1.88).
  • The gross profit margin for CITRIX SYSTEMS INC is currently very high, coming in at 91.10%. Regardless of CTXS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTXS's net profit margin of 12.19% is significantly lower than the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

Citrix Systems, Inc. designs, develops, and markets technology solutions to deliver IT services on-demand worldwide. Citrix Systems has a market cap of $13.21 billion and is part of the technology sector and computer software & services industry. The company has a P/E ratio of 38.7, above the S&P 500 P/E ratio of 17.7. Shares are up 7.4% year to date as of the close of trading on Thursday.

You can view the full Citrix Systems Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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