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. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate ORBCOMM INC (ORBC) a BUY. This is driven by some important positives, 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 17.4%. 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.
- ORBC's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ORBC has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $4.51 million or 36.71% when compared to the same quarter last year. In addition, ORBCOMM INC has also vastly surpassed the industry average cash flow growth rate of -16.83%.
- The gross profit margin for ORBCOMM INC is rather high; currently it is at 53.23%. Regardless of ORBC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORBC's net profit margin of -0.14% significantly underperformed when compared to the industry average.
- 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. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, ORBCOMM 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: ORBC Ratings Report