Why NetSuite (N) Stock Is Higher In After-Market Trading

NEW YORK (TheStreet) -- Shares of NetSuite Inc.  (N) are up 2.26% to $75.25 in after-market trading after the company reported 2014 first quarter earnings results.

Total revenue for the quarter was $123.0 million, a 34% increase over the same period a year ago.

Cash flows from operations were $19.1 million, up from $14.7 million in the same period in the prior year.

On a GAAP basis, net loss for the first quarter of 2014 was $22.2 million, or -29 cents per share, as compared to a net loss of $13.0 million, or -18 cents per share, in the first quarter of 2013.

Non-GAAP net income for the first quarter of 2014 was $4.4 million, or 6 cents per share, as compared to non-GAAP net income of $2.8 million, or 4 cents per share, in the first quarter of 2013.

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TheStreet Ratings team rates NETSUITE INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETSUITE INC (N) 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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk."

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

  • The revenue growth greatly exceeded the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 35.3%. 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.
  • Net operating cash flow has increased to $17.34 million or 29.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.60%.
  • The gross profit margin for NETSUITE INC is currently very high, coming in at 73.42%. Regardless of N's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, N's net profit margin of -17.57% significantly underperformed when compared to the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, NETSUITE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 110.0% when compared to the same quarter one year ago, falling from -$9.62 million to -$20.21 million.
  • You can view the full analysis from the report here: N Ratings Report
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