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) -- Synchronoss Technologies (Nasdaq: SNCR) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
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- The revenue growth came in higher than the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 30.1%. 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.
- SNCR's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SNCR has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
- SYNCHRONOSS TECHNOLOGIES's earnings per share declined by 43.8% 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, SYNCHRONOSS TECHNOLOGIES increased its bottom line by earning $0.70 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $0.70).
- 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 Software industry. The net income has significantly decreased by 42.1% when compared to the same quarter one year ago, falling from $6.20 million to $3.59 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, SYNCHRONOSS TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.