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) -- Websense (Nasdaq: WBSN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, impressive record of earnings per share growth, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 251.2% when compared to the same quarter one year prior, rising from -$1.83 million to $2.77 million.
- Net operating cash flow has increased to $29.20 million or 30.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.42%.
- WEBSENSE 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, WEBSENSE INC reported lower earnings of $0.49 versus $0.78 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.49).
- WBSN, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for WEBSENSE INC is currently very high, coming in at 88.90%. Regardless of WBSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WBSN's net profit margin of 3.16% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff