NEW YORK (TheStreet) -- Shares of Frequency Electronics Inc. (FEIM - Get Report) are up 10.6% to $12 after it announced it had been awarded a new satellite contract that's anticipated to exceed $11 million.
The contract calls for Frequency to design and develop a payload master timing and frequency generator system for U.S. Government end-use.
TheStreet Ratings team rates FREQUENCY ELECTRONICS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate FREQUENCY ELECTRONICS INC (FEIM) a BUY. This is driven by multiple strengths, 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 and largely solid financial position with reasonable debt levels by most measures. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 6.3%. 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.
- FEIM's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.12, which clearly demonstrates the ability to cover short-term cash needs.
- FREQUENCY ELECTRONICS INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, FREQUENCY ELECTRONICS INC reported lower earnings of $0.43 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($0.53 versus $0.43).
- In its most recent trading session, FEIM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The gross profit margin for FREQUENCY ELECTRONICS INC is currently lower than what is desirable, coming in at 33.54%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 6.68% is above that of the industry average.
- You can view the full analysis from the report here: FEIM Ratings Report