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Volcano Corporation Stock Upgraded (VOLC)

NEW YORK ( TheStreet) -- Volcano Corporation (Nasdaq: VOLC) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins, good cash flow from operations and compelling growth in net income. 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.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 14.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although VOLC's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 5.07, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for VOLCANO CORP is currently very high, coming in at 72.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.70% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $23.04 million or 17.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.46%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 1805.6% when compared to the same quarter one year prior, rising from -$1.73 million to $29.42 million.
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Volcano Corporation designs, develops, manufactures, and commercializes a suite of intravascular ultrasound (IVUS) and functional measurement (FM) products used in the diagnosis and treatment of vascular and structural heart disease. The company has a P/E ratio of 218.1, above the average health services industry P/E ratio of 210 and above the S&P 500 P/E ratio of 17.7. Volcano has a market cap of $1.44 billion and is part of the health care sector and health services industry. Shares are up 18.5% year to date as of the close of trading on Thursday.

You can view the full Volcano Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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