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) -- Lionbridge Technologies (Nasdaq: LIOX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. 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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- The revenue growth came in higher than the industry average of 12.9%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LIOX has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- LIONBRIDGE TECHNOLOGIES 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, LIONBRIDGE TECHNOLOGIES INC increased its bottom line by earning $0.19 versus $0.03 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.19).
- 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 IT Services industry and the overall market, LIONBRIDGE TECHNOLOGIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for LIONBRIDGE TECHNOLOGIES INC is currently lower than what is desirable, coming in at 28.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.61% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff