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) -- Solera Holdings (NYSE: SLH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. 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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- SLH's revenue growth has slightly outpaced the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 14.2%. 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.
- The gross profit margin for SOLERA HOLDINGS INC is rather high; currently it is at 68.02%. Regardless of SLH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLH's net profit margin of -21.36% significantly underperformed when compared to the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- 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 358.3% when compared to the same quarter one year ago, falling from $19.77 million to -$51.05 million.
- Net operating cash flow has declined marginally to $43.09 million or 5.43% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SOLERA HOLDINGS INC has marginally lower results.