NEW YORK ( TheStreet) -- Ebix (Nasdaq: EBIX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- The revenue growth came in higher than the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EBIX's debt-to-equity ratio is very low at 0.20 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 1.44, which illustrates the ability to avoid short-term cash problems.
- EBIX INC has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EBIX INC increased its bottom line by earning $1.81 versus $1.75 in the prior year. For the next year, the market is expecting a contraction of 16.6% in earnings ($1.51 versus $1.81).
- 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 Software industry and the overall market, EBIX INC's return on equity exceeds that of both the industry average and the S&P 500.
- EBIX'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 52.54%, 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.