NEW YORK (TheStreet) -- Valassis Communications (NYSE:VCI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 38.2% when compared to the same quarter one year prior, rising from $24.79 million to $34.27 million.
- VALASSIS COMMUNICATIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALASSIS COMMUNICATIONS INC reported lower earnings of $2.35 versus $7.46 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $2.35).
- VCI, with its decline in revenue, underperformed when compared the industry average of 19.1%. Since the same quarter one year prior, revenues slightly dropped by 5.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Even though the current debt-to-equity ratio is 1.34, it is still below the industry average, suggesting that this level of debt is acceptable within the Media industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.13 is sturdy.
-- Written by a member of TheStreet RatingsStaff
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