Acxiom Corp Stock Downgraded (ACXM)

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) -- Acxiom (Nasdaq: ACXM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, ACXM has a quick ratio of 2.41, which demonstrates the ability of the company to cover short-term liquidity needs.
  • ACXIOM CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ACXIOM CORP increased its bottom line by earning $0.75 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($0.82 versus $0.75).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the IT Services industry and the overall market, ACXIOM CORP'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 ACXIOM CORP is currently lower than what is desirable, coming in at 33.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.42% trails that of the industry average.

Acxiom Corporation operates as an enterprise data, analytics, and software-as-a-service company in the United States, Europe, South America, and the Asia-Pacific. The company operates in three segments: Marketing and Data Services, IT Infrastructure Management, and Other Services. The company has a P/E ratio of 54.9, above the S&P 500 P/E ratio of 17.7. Acxiom has a market cap of $2.2 billion and is part of the technology sector and computer software & services industry. Shares are down 22.6% year to date as of the close of trading on Monday.

You can view the full Acxiom Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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