Rating Change #3
Leucadia National Corporation (LUK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- LUK's very impressive revenue growth greatly exceeded the industry average of 2.8%. Since the same quarter one year prior, revenues leaped by 995.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- LUK's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 136.7% when compared to the same quarter one year prior, rising from -$291.02 million to $106.67 million.
- Net operating cash flow has significantly increased by 850.75% to $199.94 million when compared to the same quarter last year. In addition, LEUCADIA NATIONAL CORP has also vastly surpassed the industry average cash flow growth rate of -154.16%.
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