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 revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- ITRN's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ITRN's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
- ITURAN LOCATION & CONTROL has improved earnings per share by 18.5% 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, ITURAN LOCATION & CONTROL reported lower earnings of $0.42 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.42).
- The net income growth from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income increased by 16.5% when compared to the same quarter one year prior, going from $5.69 million to $6.64 million.
- The gross profit margin for ITURAN LOCATION & CONTROL is rather high; currently it is at 50.20%. Regardless of ITRN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.90% trails the industry average.
Ituran Location and Control Ltd., together with its subsidiaries, provides location-based services and wireless communication products in Israel, Brazil, Argentina, and the United States. The company has a P/E ratio of 30, above the average wholesale industry P/E ratio of 21.7 and above the S&P 500 P/E ratio of 17.7. Ituran Location and Control has a market cap of $295.8 million and is part of the
industry. Shares are down 28% year to date as of the close of trading on Thursday.
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