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"We rate INFOBLOX INC (BLOX) 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."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BLOX's revenue growth trails the industry average of 28.1%. Since the same quarter one year prior, revenues slightly increased by 2.9%. 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.
- BLOX 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 this, the company maintains a quick ratio of 2.76, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for INFOBLOX INC is currently very high, coming in at 77.98%. Regardless of BLOX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BLOX's net profit margin of -14.68% significantly underperformed when compared to 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 741.0% when compared to the same quarter one year ago, falling from $1.49 million to -$9.53 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, INFOBLOX 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: BLOX Ratings Report