Why Tibco Software (TIBX) Stock Is Up Today

NEW YORK (TheStreet) -- Tibco Software  (TIBX) was gaining 6.5% to $20.23 Wednesday following reports that private equity firms are competing to buy the business software company.

Vista Equity Partners and Thomas Bravo are a part of a small group of private equity firms vying for the opportunity to acquire Tibco, according to Reuters.

Tibco will reportedly review the binding offers from the competing firms in the coming weeks. There is no certainty the company will sell itself, despite pressure from activist investors, according to Reuters' sources.

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Earlier this month Tibco announced it hired Goldman Sachs (GS) to help it explore its strategic alternatives.

TheStreet Ratings team rates TIBCO SOFTWARE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIBCO SOFTWARE INC (TIBX) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.4%. Since the same quarter one year prior, revenues slightly increased by 2.6%. 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.
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TIBX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.90 is high and demonstrates strong liquidity.
  • The gross profit margin for TIBCO SOFTWARE INC is currently very high, coming in at 72.52%. Regardless of TIBX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TIBX's net profit margin of 0.61% is significantly lower than the industry average.
  • 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 82.2% when compared to the same quarter one year ago, falling from $8.72 million to $1.55 million.
  • 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. When compared to other companies in the Software industry and the overall market, TIBCO SOFTWARE INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: TIBX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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