NEW YORK (TheStreet) -- Shares of EPIQ Systems Inc. (EPIQ) are higher by 7.23% to $18.54 on heavy volume in early afternoon trading on Monday, after the company announced it refused a $20 per share takeover offer from its shareholder P2 Capital Partners LLC, the Kansas City Star reports.
EPIQ Systems, a global provider of managed technology for the legal profession, said its board "unanimously determined that the P2 proposal does not unlock the company's long term value, is inadequate from a financial point of view, and is not in the best interest of the company and its shareholders."
EPIQ said it will continue to explore strategic alternatives and determine what course of action is in the company and its shareholders' best interest, but also cautioned that the board's review may not result in an acquisition, divestiture, going private, or recapitalization transaction.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
The hedge fund P2 Capital increased its stake in EPIQ Systems to 16.9% from almost 4.9% after its $1.1 billion offer to take the company private was declined, making it the company's largest shareholder, the KCS added.
Separately, TheStreet Ratings team rates EPIQ SYSTEMS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EPIQ SYSTEMS INC (EPIQ) 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 solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, EPIQ's share price has jumped by 33.18%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.4%. Since the same quarter one year prior, revenues rose by 10.3%. 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.
- EPIQ's debt-to-equity ratio of 0.95 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.77 is very high and demonstrates very strong liquidity.
- 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 Software industry. The net income has significantly decreased by 220.3% when compared to the same quarter one year ago, falling from $2.84 million to -$3.42 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, EPIQ SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: EPIQ Ratings Report