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) -- NetApp (Nasdaq: NTAP) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
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- NTAP's revenue growth trails the industry average of 27.6%. Since the same quarter one year prior, revenues slightly increased by 2.3%. 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.
- Although NTAP's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for NETAPP INC is rather high; currently it is at 64.90%. Regardless of NTAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NTAP's net profit margin of 7.11% is significantly lower than the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 33.8% when compared to the same quarter one year ago, falling from $165.60 million to $109.60 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Computers & Peripherals industry and the overall market, NETAPP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
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