Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc., or any of its contributors. 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 DOT HILL SYSTEMS CORP (HILL) a BUY. This is driven by a number of strengths, 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures 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:
- DOT HILL SYSTEMS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOT HILL SYSTEMS CORP increased its bottom line by earning $0.12 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.12).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 284.5% when compared to the same quarter one year prior, rising from $2.21 million to $8.51 million.
- HILL's revenue growth trails the industry average of 31.5%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HILL 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, HILL has a quick ratio of 1.57, which demonstrates the ability of the company to cover short-term liquidity needs.
- 36.77% is the gross profit margin for DOT HILL SYSTEMS CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HILL's net profit margin of 12.30% significantly trails the industry average.
- You can view the full analysis from the report here: HILL Ratings Report