NEW YORK (TheStreet) -- TheStreet's Jim Cramer says investors expected nothing from Apple (AAPL - Get Report) and Caterpillar (CAT - Get Report) when the two companies reported their earnings, but both companies surpassed expectations and the stocks traded higher on Thursday.
American Airlines Group (AAL - Get Report), though, had greater expectations and the stock was up Wednesday ahead of the quarterly report on Thursday morning. Cramer says the market is in a situation wherein stocks with any significant expectations are getting killed even if they beat analysts' estimates.
"We rate APPLE INC (AAPL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AAPL's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although AAPL's debt-to-equity ratio of 0.13 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 41.65% is the gross profit margin for APPLE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.69% is above that of the industry average.
- APPLE INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, APPLE INC reported lower earnings of $39.63 versus $44.16 in the prior year. This year, the market expects an improvement in earnings ($42.74 versus $39.63).
- You can view the full analysis from the report here: AAPL Ratings Report