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) -- Actuate Corporation (Nasdaq: BIRT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 0.2%. 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.
- BIRT's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BIRT has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 470.76% to $9.65 million when compared to the same quarter last year. In addition, ACTUATE CORP has also vastly surpassed the industry average cash flow growth rate of -7.09%.
- The gross profit margin for ACTUATE CORP is currently very high, coming in at 86.70%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BIRT's net profit margin of 8.64% significantly trails the industry average.
- ACTUATE CORP's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ACTUATE CORP reported lower earnings of $0.19 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.19).
-- Written by a member of TheStreet Ratings Staff