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) -- M.D.C. Holdings (NYSE:MDC) 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, notable return on equity, attractive valuation levels, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 26.4%. Since the same quarter one year prior, revenues rose by 16.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Household Durables industry and the overall market, MDC HOLDINGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has increased to -$43.69 million or 25.14% when compared to the same quarter last year. In addition, MDC HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of 22.26%.
- MDC HOLDINGS INC has improved earnings per share by 5.1% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MDC HOLDINGS INC increased its bottom line by earning $6.36 versus $1.26 in the prior year. For the next year, the market is expecting a contraction of 71.8% in earnings ($1.79 versus $6.36).
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