Rating Change #1
RELM Wireless Corporation
(RWC - Get Report)
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, solid stock price performance, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- RWC's revenue growth has slightly outpaced the industry average of 13.9%. Since the same quarter one year prior, revenues rose by 16.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- RWC's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RWC has a quick ratio of 2.09, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, RWC's share price has jumped by 74.78%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RWC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Net operating cash flow has significantly increased by 86.20% to $2.20 million when compared to the same quarter last year. In addition, RELM WIRELESS CORP has also vastly surpassed the industry average cash flow growth rate of 14.03%.
RELM Wireless Corporation engages in the design, manufacture, and marketing of wireless communications products in the United States and internationally. Its products include two-way land mobile radios, repeaters, base stations, and related components and subsystems. The company has a P/E ratio of 13.8, below the S&P 500 P/E ratio of 17.7. RELM Wireless has a market cap of $28 million and is part of the technology sector and telecommunications industry. Shares are up 19.6% year to date as of the close of trading on Friday.
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-- Reported by Kevin Baker in Palm Beach Gardens, Fla.
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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.