NEW YORK (
) has been upgraded by TheStreet Ratings from sell to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, solid stock price performance 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:
- KAR's revenue growth has slightly outpaced the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- KAR AUCTION SERVICES INC has improved earnings per share by 21.1% 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 year. We feel that this trend should continue. During the past fiscal year, KAR AUCTION SERVICES INC increased its bottom line by earning $0.51 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.51).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Services & Supplies industry average. The net income increased by 25.8% when compared to the same quarter one year prior, rising from $25.60 million to $32.20 million.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- 45.00% is the gross profit margin for KAR AUCTION SERVICES INC which we consider to be strong. Regardless of KAR'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 7.20% trails the industry average.
KAR Auction Services, Inc., through its subsidiaries, provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAAI, and AFC. The company has a P/E ratio of 34.5, above the average specialty retail industry P/E ratio of 30.2 and above the S&P 500 P/E ratio of 17.7. KAR Auction Services has a market cap of $1.89 billion and is part of the
industry. Shares are up 18.2% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet RatingsStaff