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) -- SoundBite Communications (Nasdaq: SDBT) has been upgraded by TheStreet Ratings from hold to buy. 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, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- SDBT's revenue growth trails the industry average of 33.3%. Since the same quarter one year prior, revenues rose by 11.0%. 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.
- SDBT 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. Along with this, the company maintains a quick ratio of 4.87, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 62.80% to $0.66 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.48%.
- The gross profit margin for SOUNDBITE COMMUNICATIONS INC is rather high; currently it is at 67.20%. 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 -4.21% is in-line with the industry average.
- SOUNDBITE COMMUNICATIONS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, SOUNDBITE COMMUNICATIONS INC continued to lose money by earning -$0.09 versus -$0.21 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.09).
-- Written by a member of TheStreet Ratings Staff