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) -- EPAM Systems (NYSE: EPAM) has been upgraded by TheStreet Ratings from hold to buy. 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, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth greatly exceeded the industry average of 20.5%. Since the same quarter one year prior, revenues rose by 27.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EPAM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.29, which clearly demonstrates the ability to cover short-term cash needs.
- EPAM SYSTEMS INC has improved earnings per share by 13.3% 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 year. We feel that this trend should continue. During the past fiscal year, EPAM SYSTEMS INC increased its bottom line by earning $1.20 versus $0.64 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $1.20).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 16.9% when compared to the same quarter one year prior, going from $14.07 million to $16.44 million.
- Net operating cash flow has increased to $15.58 million or 40.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.92%.