Buy Recommendation Reiterated For EMC Corporation

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) -- EMC Corporation (NYSE: EMC) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • EMC's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 4.9%. 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.
  • Net operating cash flow has increased to $1,792.00 million or 24.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.77%.
  • EMC CORP/MA' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, EMC CORP/MA increased its bottom line by earning $1.23 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.23).
  • The gross profit margin for EMC CORP/MA is rather high; currently it is at 69.58%. EMC has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.57% trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.26 is sturdy.

EMC Corporation, together with its subsidiaries, develops, delivers, and supports information infrastructure and virtual infrastructure technologies, solutions, and services. EMC has a market cap of $54.2 billion and is part of the technology sector and computer hardware industry. The company has a P/E ratio of 21.00, above the S&P 500 P/E ratio of 18.00. Shares are up 4.7% year to date as of the close of trading on Friday.

You can view the full EMC Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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