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"We rate TERADATA CORP (TDC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.2%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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.
- TDC's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TDC has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for TERADATA CORP is rather high; currently it is at 61.24%. Regardless of TDC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.20% trails the industry average.
- TERADATA CORP's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TERADATA CORP reported lower earnings of $2.27 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.27).
- You can view the full analysis from the report here: TDC Ratings Report
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