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) -- Higher One Holdings (NYSE: ONE) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk.
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- 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. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, HIGHER ONE HOLDINGS INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- The gross profit margin for HIGHER ONE HOLDINGS INC is rather high; currently it is at 66.60%. Regardless of ONE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ONE's net profit margin of 17.08% compares favorably to the industry average.
- Net operating cash flow has decreased to $22.53 million or 30.01% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- 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 IT Services industry. The net income has significantly decreased by 26.8% when compared to the same quarter one year ago, falling from $13.39 million to $9.80 million.
-- Written by a member of TheStreet Ratings Staff