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) -- LinkedIn (NYSE: LNKD) has been reiterated by TheStreet Ratings as a sell with a ratings score of D+. The area that we feel has been the company's primary weakness has been its disappointing return on equity.
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- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- This stock has increased by 59.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The gross profit margin for LINKEDIN CORP is currently very high, coming in at 87.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, LNKD's net profit margin of 6.96% significantly trails the industry average.
- Net operating cash flow has significantly increased by 64.24% to $103.83 million when compared to the same quarter last year. In addition, LINKEDIN CORP has also vastly surpassed the industry average cash flow growth rate of -2.35%.
- LNKD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, LNKD has a quick ratio of 2.23, which demonstrates the ability of the company to cover short-term liquidity needs.
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