Equinix Inc. Stock Buy Recommendation Reiterated (EQIX)

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) -- Equinix (Nasdaq: EQIX) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • EQIX's revenue growth trails the industry average of 29.8%. Since the same quarter one year prior, revenues rose by 17.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • EQUINIX INC reported flat earnings per share in the most recent quarter. 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, EQUINIX INC increased its bottom line by earning $2.66 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.19 versus $2.66).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 3.9% when compared to the same quarter one year prior, going from $34.52 million to $35.88 million.
  • Compared to its closing price of one year ago, EQIX's share price has jumped by 39.54%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • The gross profit margin for EQUINIX INC is currently very high, coming in at 70.70%. Regardless of EQIX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EQIX's net profit margin of 6.90% is significantly lower than the industry average.

Equinix, Inc. provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Equinix has a market cap of $11.3 billion and is part of the technology sector and internet industry. The company has a P/E ratio of 86.00, above the S&P 500 P/E ratio of 18.00. Shares are up 11.1% year to date as of the close of trading on Wednesday.

You can view the full Equinix Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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