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) -- Evolving Systems (Nasdaq: EVOL) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that net income has been generally deteriorating over time.
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- EVOL's very impressive revenue growth greatly exceeded the industry average of 1.8%. Since the same quarter one year prior, revenues leaped by 60.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- EVOL's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EVOL has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
- EVOLVING SYSTEMS INC reported significant earnings per share improvement 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, EVOLVING SYSTEMS INC reported poor results of -$0.10 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus -$0.10).
- 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 Software industry and the overall market on the basis of return on equity, EVOLVING SYSTEMS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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 Software industry. The net income has significantly decreased by 93.2% when compared to the same quarter one year ago, falling from $18.20 million to $1.24 million.
-- Written by a member of TheStreet Ratings Staff