Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

.

NEW YORK (

TheStreet

)

-- Dawson Geophysical Company

(Nasdaq:

DWSN

) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

  • DWSN's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DWSN has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 701.73% to $9.01 million when compared to the same quarter last year. In addition, DAWSON GEOPHYSICAL CO has also vastly surpassed the industry average cash flow growth rate of 32.02%.
  • DAWSON GEOPHYSICAL CO's earnings per share declined by 12.2% 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, DAWSON GEOPHYSICAL CO turned its bottom line around by earning $1.40 versus -$0.42 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus $1.40).
  • DWSN, with its decline in revenue, underperformed when compared the industry average of 7.6%. Since the same quarter one year prior, revenues fell by 17.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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.

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Dawson Geophysical Company provides onshore seismic data acquisition and processing services in the United States and Canada. The company has a P/E ratio of 23.1, above the S&P 500 P/E ratio of 17.7. Dawson Geophysical has a market cap of $251.2 million and is part of the basic materials sector and energy industry. Shares are up 17.8% year to date as of the close of trading on Friday.

You can view the full

Dawson Geophysical Ratings Report

or get investment ideas from our

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-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model

.

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