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) -- Verint Systems (Nasdaq: VRNT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- VERINT SYSTEMS INC reported significant earnings per share improvement 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. We feel that this trend should continue. During the past fiscal year, VERINT SYSTEMS INC increased its bottom line by earning $0.92 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $0.92).
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has significantly increased by 661.55% to $46.50 million when compared to the same quarter last year. In addition, VERINT SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of -15.06%.
- The gross profit margin for VERINT SYSTEMS INC is currently very high, coming in at 70.42%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VRNT's net profit margin of 7.88% significantly trails the industry average.
- Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 26.42% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.