TSC Ratings' Updates: Toyota

The following ratings changes were generated on Tuesday, Jan. 13.

We've upgraded Hansen Natural(HANS Quote), which engages in the development, marketing, sale, and distribution of beverages, from hold to buy, driven by its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Revenue is up 15.3% since the year-ago quarter, outpacing the industry average of 11.2% growth. Hansen's debt-to-equity ratio is very low and currently below the industry average, implying very successful management of debt levels, and the company's quick ratio of 3.9 clearly demonstrates its ability to cover short-term cash needs. Return on equity has improved slightly compared with the year-ago quarter, outperforming both the industry and the S&P 500. Net income increased by 14.5% to $52.4 million, also outperforming the beverages industry and the S&P 500.

Earnings per share are up 17.4% compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years that we feel that should continue. During the past fiscal year, it increased its bottom line by earning $1.51 vs/ $1 in the prior year, and this year, the market expects further improvement in earnings to $1.77.