NEW YORK (
-- CPI Aerostructures
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- CPI AEROSTRUCTURES INC has improved earnings per share by 35.7% in the most recent quarter compared to the same quarter a year ago. 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, CPI AEROSTRUCTURES INC reported lower earnings of $0.09 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $0.09).
- Powered by its strong earnings growth of 35.71% and other important driving factors, this stock has surged by 67.67% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
- CVU'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. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.34 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 58.9% when compared to the same quarter one year prior, rising from $0.86 million to $1.37 million.
- The revenue growth greatly exceeded the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 45.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
CPI Aerostructures, Inc. engages in the contract production of structural aircraft parts for the United States Air Force and other branches of the U.S. armed forces as a prime contractor or subcontractor for other defense prime contractors primarily in the United States. The company has a P/E ratio of 110.4, below the average aerospace/defense industry P/E ratio of 179.4 and above the S&P 500 P/E ratio of 16.9. CPI Aerostructures has a market cap of $97.5 million and is part of the
industry. Shares are up 2.1% year to date as of the previous trading day's close.
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