NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- CRAY 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for CRAY INC is rather high; currently it is at 50.10%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.30% is in-line with the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, CRAY INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
Cray Inc. engages in the design, development, manufacture, marketing, and service of high-performance computing (HPC) systems, known as supercomputers. The company has a P/E ratio of 7.7, above the average computer hardware industry P/E ratio of seven and below the S&P 500 P/E ratio of 17.7. Cray has a market cap of $264.1 million and is part of the
industry. Shares are up 22.4% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet RatingsStaff