NEW YORK (TheStreet) -- Hot Topic (Nasdaq:HOTT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- Powered by its strong earnings growth of 2200.00% and other important driving factors, this stock has surged by 62.47% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HOTT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HOT TOPIC INC 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 year. We feel that this trend should continue. During the past fiscal year, HOT TOPIC INC continued to lose money by earning -$0.04 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus -$0.04).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 1649.5% when compared to the same quarter one year prior, rising from -$0.58 million to $8.96 million.
- Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.97 is weak.
- Net operating cash flow has increased to $35.71 million or 21.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.32%.
-- Written by a member of TheStreet RatingsStaff
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