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) -- Official Payments Holdings (Nasdaq: OPAY) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 27.91% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- OFFICIAL PAYMENTS HLDGS 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, OFFICIAL PAYMENTS HLDGS INC continued to lose money by earning -$0.35 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.35).
- 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%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market, OFFICIAL PAYMENTS HLDGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for OFFICIAL PAYMENTS HLDGS INC is currently lower than what is desirable, coming in at 29.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.47% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff