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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- ERT's revenue growth has slightly outpaced the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ERT'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. To add to this, ERT has a quick ratio of 2.12, which demonstrates the ability of the company to cover short-term liquidity needs.
- ERESEARCHTECHNOLOGY INC has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ERESEARCHTECHNOLOGY INC increased its bottom line by earning $0.28 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus $0.28).
- The net income growth from the same quarter one year ago has exceeded that of the Life Sciences Tools & Services industry average, but is less than that of the S&P 500. The net income increased by 9.9% when compared to the same quarter one year prior, going from $4.12 million to $4.53 million.
- After a year of stock price fluctuations, the net result is that ERT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
eResearchTechnology, Inc., together with its subsidiaries, provides technological services and medical devices in North America and the United Kingdom. The company has a P/E ratio of 24.2, above the average health services industry P/E ratio of 20.2 and above the S&P 500 P/E ratio of 17.7. eResearchTechnology has a market cap of $268.9 million and is part of the
industry. Shares are up 46.5% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet RatingsStaff