Why LogMeIn (LOGM) Stock Surged to a One-Year High Today

NEW YORK (TheStreet) -- LogMeIn  (LOGM) rose to a one-year high of $47.69 on Wednesday after the cloud-based connectivity services provider reported first-quarter earnings that beat analysts' estimate and increased full-year revenue guidance.

The company reported an increase adjusted net income year over year to $5.5 million, or 22 cents per diluted share, from $3.1 million, or 12 cents per diluted share. This beat estimates by a penny. Revenue increased 31% year over year to $49.02 million, which beat analysts' expectations of $47.1 million.

LogMeIn also increased its full-year revenue guidance by $10 million to a range of $209 million to $212 million, which would mark a 26% to 27% increase compared to 2013 revenue.

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

"We rate LOGMEIN INC (LOGM) 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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

  • The revenue growth came in higher than the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 22.2%. 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.
  • LOGM 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. To add to this, LOGM has a quick ratio of 1.86, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for LOGMEIN INC is currently very high, coming in at 93.24%. Regardless of LOGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LOGM's net profit margin of -1.01% significantly underperformed when compared to the industry average.
  • 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 Internet Software & Services industry. The net income has significantly decreased by 120.9% when compared to the same quarter one year ago, falling from $2.20 million to -$0.46 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, LOGMEIN INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: LOGM Ratings Report

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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.

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