QAD Inc Stock Downgraded (QADB)

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) -- QAD (Nasdaq: QADB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 94.0% when compared to the same quarter one year prior, rising from -$1.26 million to -$0.08 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 10.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QADB's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Software industry and the overall market, QAD INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $3.18 million or 74.10% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

QAD Inc. provides enterprise software solutions for manufacturers in the automotive, consumer products, food and beverage, high technology, industrial products, and life sciences industries Worldwide. QAD has a market cap of $49.2 million and is part of the technology sector and computer software & services industry. Shares are down 3.2% year to date as of the close of trading on Wednesday.

You can view the full QAD 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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