NEW YORK ( TheStreet) -- Pactera Technology International (Nasdaq: PACT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- PACT's very impressive revenue growth greatly exceeded the industry average of 13.4%. Since the same quarter one year prior, revenues leaped by 132.6%. 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.
- PACT 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. Along with this, the company maintains a quick ratio of 2.94, which clearly demonstrates the ability to cover short-term cash needs.
- PACTERA TECHNOLOGY INTL has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PACTERA TECHNOLOGY INTL reported lower earnings of $0.18 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.18).
- The gross profit margin for PACTERA TECHNOLOGY INTL is currently lower than what is desirable, coming in at 29.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.09% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$31.65 million or 1131.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.