Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- ShoreTel (Nasdaq: SHOR) 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 solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
- 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 54.4% when compared to the same quarter one year prior, rising from -$5.05 million to -$2.30 million.
- SHOR's revenue growth trails the industry average of 28.1%. Since the same quarter one year prior, revenues slightly increased by 9.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SHORETEL INC reported significant earnings per share improvement 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, SHORETEL INC reported poor results of -$0.45 versus -$0.41 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.45).
- The gross profit margin for SHORETEL INC is rather high; currently it is at 59.88%. Regardless of SHOR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SHOR's net profit margin of -2.68% significantly underperformed when compared to the industry average.
- 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 Communications Equipment industry and the overall market, SHORETEL INC's return on equity significantly trails that of both the industry average and the S&P 500.