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) -- ModusLink Global Solutions (Nasdaq: MLNK) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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- Powered by its strong earnings growth of 104.54% and other important driving factors, this stock has surged by 72.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 105.8% when compared to the same quarter one year prior, rising from -$10.66 million to $0.62 million.
- Despite the weak revenue results, MLNK has outperformed against the industry average of 22.7%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for MODUSLINK GLOBAL SOLUTIONS is currently extremely low, coming in at 13.31%. Regardless of MLNK's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MLNK's net profit margin of 0.32% is significantly lower than the industry average.
- Net operating cash flow has significantly decreased to -$10.11 million or 219.36% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.