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) -- Apollo Group (Nasdaq: APOL) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and a generally disappointing performance in the stock itself.
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- APOL's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
- The revenue fell significantly faster than the industry average of 25.4%. Since the same quarter one year prior, revenues fell by 15.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- APOLLO GROUP INC's earnings per share declined by 36.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, APOLLO GROUP INC reported lower earnings of $3.19 versus $4.02 in the prior year. For the next year, the market is expecting a contraction of 13.8% in earnings ($2.75 versus $3.19).
- 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 Diversified Consumer Services industry. The net income has significantly decreased by 40.3% when compared to the same quarter one year ago, falling from $134.03 million to $79.95 million.
-- Written by a member of TheStreet Ratings Staff