Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK (TheStreet) -- Post Holdings (NYSE:POST) 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The revenue growth came in higher than the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 18.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- POST's debt-to-equity ratio of 0.94 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.58 is very high and demonstrates very strong liquidity.
- Compared to its closing price of one year ago, POST's share price has jumped by 47.45%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- Net operating cash flow has slightly increased to $53.00 million or 8.82% when compared to the same quarter last year. Despite an increase in cash flow, POST HOLDINGS INC's average is still marginally south of the industry average growth rate of 11.27%.
- 47.99% is the gross profit margin for POST HOLDINGS INC which we consider to be strong. Regardless of POST's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, POST's net profit margin of -0.30% significantly underperformed when compared to the industry average.
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