NEW YORK (TheStreet) -- Comtech Telecommunications Corporation (Nasdaq:CMTL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- 44.20% is the gross profit margin for COMTECH TELECOMMUN which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CMTL's net profit margin of 5.90% significantly trails the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite currently having a low debt-to-equity ratio of 0.41, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.58 is very high and demonstrates very strong liquidity.
- The revenue fell significantly faster than the industry average of 16.8%. Since the same quarter one year prior, revenues fell by 39.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet RatingsStaff
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