LifeLock Inc Stock Upgraded (LOCK)

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) -- LifeLock (NYSE: LOCK) has been upgraded by TheStreet Ratings from sell to hold. 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 29.3%. 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.
  • LOCK 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, LIFELOCK INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • LIFELOCK INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LIFELOCK INC increased its bottom line by earning $0.53 versus $0.15 in the prior year. For the next year, the market is expecting a contraction of 13.2% in earnings ($0.46 versus $0.53).
  • 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 Diversified Consumer Services industry. The net income has significantly decreased by 35.6% when compared to the same quarter one year ago, falling from -$2.07 million to -$2.80 million.

LifeLock, Inc. provides identity theft protection services for consumers; and fraud and risk solutions for enterprises in the United States. LifeLock has a market cap of $1.31 billion and is part of the technology sector and computer software & services industry. Shares are down 12.6% year to date as of the close of trading on Tuesday.

You can view the full LifeLock 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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