NEW YORK (TheStreet) -- Monarch Casino & Resort (Nasdaq:MCRI) 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, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 12.7%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for MONARCH CASINO & RESORT INC is rather high; currently it is at 51.90%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MCRI's net profit margin of 4.70% significantly trails the industry average.
- MCRI's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that MCRI's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- MONARCH CASINO & RESORT INC has improved earnings per share by 11.1% 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, MONARCH CASINO & RESORT INC reported lower earnings of $0.34 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.34).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Hotels, Restaurants & Leisure industry average. The net income increased by 6.6% when compared to the same quarter one year prior, going from $1.54 million to $1.64 million.
-- Written by a member of TheStreet RatingsStaff
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