Active Network Inc Stock Upgraded (ACTV)

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) -- Active Network (NYSE: ACTV) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from -$20.34 million to -$15.23 million.
  • ACTV's revenue growth trails the industry average of 31.5%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ACTIVE NETWORK INC has improved earnings per share by 30.6% in the most recent quarter compared to 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, ACTIVE NETWORK INC reported poor results of -$0.74 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.18 versus -$0.74).
  • ACTV's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 49.80%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, ACTIVE NETWORK INC's return on equity significantly trails that of both the industry average and the S&P 500.
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The Active Network, Inc. provides organization-based cloud computing application services to business customers in North America, Europe, and internationally. Active Network has a market cap of $455.2 million and is part of the technology sector and computer software & services industry. Shares are up 50.3% year to date as of the close of trading on Monday.

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

-- Written by a member of TheStreet Ratings Staff

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.

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