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) -- Equinix (Nasdaq: EQIX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 57.5% when compared to the same quarter one year prior, rising from $26.97 million to $42.47 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 12.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has significantly increased by 102.21% to $206.56 million when compared to the same quarter last year. In addition, EQUINIX INC has also vastly surpassed the industry average cash flow growth rate of 12.09%.
- The gross profit margin for EQUINIX INC is rather high; currently it is at 50.48%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EQIX's net profit margin of 7.82% significantly trails the industry average.
- EQUINIX INC reported significant earnings per share improvement 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EQUINIX INC increased its bottom line by earning $2.56 versus $1.71 in the prior year. For the next year, the market is expecting a contraction of 36.7% in earnings ($1.62 versus $2.56).