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) -- NCI (Nasdaq: NCIT) 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 find that the company's profit margins have been poor overall.
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- Powered by its strong earnings growth of 105.97% and other important driving factors, this stock has surged by 54.83% 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 -$34.69 million to $2.00 million.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.6%. Since the same quarter one year prior, revenues fell by 10.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the IT Services industry and the overall market, NCI INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for NCI INC is currently extremely low, coming in at 13.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.50% significantly trails the industry average.