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Cardtronics Inc Stock Upgraded (CATM)

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) -- Cardtronics (Nasdaq: CATM) 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 25.0%. 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.
  • Net operating cash flow has slightly increased to $42.35 million or 8.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.24%.
  • Despite the current debt-to-equity ratio of 1.70, it is still below the industry average, suggesting that this level of debt is acceptable within the IT Services industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.73 is weak.
  • CARDTRONICS INC's earnings per share declined by 6.1% 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, CARDTRONICS INC reported lower earnings of $0.51 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus $0.51).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

Cardtronics, Inc. provides automated consumer financial services through its network of automated teller machines (ATMs) and multi-function financial services kiosks. It operates through U.S., Europe, and Other International segments. Cardtronics has a market cap of $1.7 billion and is part of the services sector and diversified services industry. Shares are down 12% year to date as of the close of trading on Wednesday.

You can view the full Cardtronics Ratings Report or get investment ideas from our investment research center.

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