Why Ellie Mae (ELLI) Is Up Today

NEW YORK (TheStreet) -- Ellie Mae (ELLI) was gaining 18.3% to $29.38 Friday after reporting record revenue for the full year 2013.

The company reported total revenue increased 26% to $128.5 million for 2013, up from $101.8 million for 2012.

For the fourth quarter Ellie Mae reported revenue of $30.35 million, beating analyst estimates of $29.84 million for the quarter. The company posted earnings of 18 cents a share for the quarter. Analysts surveyed by Thomson Reuters expected earnings of 18 cents a share.

The software company forecasts revenue of between $150 million and $153.5 million for 2014. Analysts expect revenue of $151.5 million for the year.

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TheStreet Ratings team rates ELLIE MAE INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ELLIE MAE INC (ELLI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ELLI's revenue growth has slightly outpaced the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
  • ELLI 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 4.43, which clearly demonstrates the ability to cover short-term cash needs.
  • ELLIE MAE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ELLIE MAE INC increased its bottom line by earning $0.76 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.76).
  • 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 50.8% when compared to the same quarter one year ago, falling from $6.83 million to $3.36 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, ELLIE MAE INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ELLI Ratings Report

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