Rating Change #6
FreightCar America Inc (RAIL) 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, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 23.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RAIL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, RAIL has a quick ratio of 2.21, which demonstrates the ability of the company to cover short-term liquidity needs.
- FREIGHTCAR AMERICA 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 two years. We feel that this trend should continue. During the past fiscal year, FREIGHTCAR AMERICA INC turned its bottom line around by earning $0.42 versus -$1.07 in the prior year. This year, the market expects an improvement in earnings ($1.94 versus $0.42).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 294.9% when compared to the same quarter one year prior, rising from -$2.44 million to $4.76 million.
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