Why Vonage (VG) Stock Is Up Today

NEW YORK (TheStreet) -- Vonage (VG) was gaining 9.1% to $4.19 Thursday after beating analysts' estimates for earning in the first quarter.

The communications company reported earnings of 6 cents a share for the first quarter, beating the Capital IQ Consensus Estimate of 3 cents a share by 3 cents. Revenue increased 5.5% year-over-year to $220.7 million. Analysts expected revenue of $220.25 million for the quarter.

Average revenue per user (ARPU) wad $28.86 for the first quarter, up $28.72 sequentially from the fourth quarter due to the new Vonage Business Solutions the company formed when it acquired Vocalocity in November 2013. ARPU was down from $29.61 in the year-ago quarter due to the growing proportion of BasicTalk lines.

"Vonage generated strong results for the quarter, including increased revenue both sequentially and year-over-year, as well as the highest level of adjusted EBITDA in the last four quarters," CEO Marc Lefar said in a press release. "Vonage Business Solutions' strong performance reflects an acceleration in growth, and we will continue to invest to further penetrate the attractive market for small and medium businesses."

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TheStreet Ratings team rates VONAGE HOLDINGS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate VONAGE HOLDINGS CORP (VG) 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 expanding profit margins, 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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

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