NEW YORK (TheStreet) -- ZAGG (ZAGG - Get Report) shares are up 7.8% to $5.68 in early market trading on Wednesday after being upgraded to "outperform" from "market perform" by analysts at Northland Securities who also increased their price target to $6.50 from $5.
The electronic accessories manufacturer reported a 30% increase in second quarter tablet keyboard sales yesterday, although overall revenue and profit was down from the previous year.
TheStreet Ratings team rates ZAGG INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZAGG INC (ZAGG) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Household Durables industry average. The net income increased by 12.8% when compared to the same quarter one year prior, going from $0.88 million to $0.99 million.
- ZAGG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, ZAGG has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- 37.48% is the gross profit margin for ZAGG INC which we consider to be strong. Regardless of ZAGG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.01% trails the industry average.
- Net operating cash flow has decreased to $11.94 million or 15.78% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Household Durables industry and the overall market, ZAGG INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ZAGG Ratings Report