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NEW YORK (TheStreet) -- American Software (AMSWA) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN SOFTWARE (AMSWA) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMSWA 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. To add to this, AMSWA has a quick ratio of 2.26, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for AMERICAN SOFTWARE is rather high; currently it is at 54.71%. Regardless of AMSWA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMSWA's net profit margin of 4.78% is significantly lower than 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. When compared to other companies in the Software industry and the overall market, AMERICAN SOFTWARE's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$1.39 million or 460.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: AMSWA Ratings Report