NEW YORK (TheStreet) -- Salem Communications Corporation (Nasdaq:SALM) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and revenue growth. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 19.7%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 33.33% and other important driving factors, this stock has surged by 34.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although SALM had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- Even though the current debt-to-equity ratio is 1.31, 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 0.85 is weak.
- The gross profit margin for SALEM COMMUNICATIONS CORP is currently lower than what is desirable, coming in at 33.80%. Regardless of SALM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.80% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 35.1% when compared to the same quarter one year ago, falling from $0.69 million to $0.45 million.
-- Written by a member of TheStreet RatingsStaff
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