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

)

-- Numerex

(Nasdaq:

NMRX

) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:

  • NUMEREX CORP reported significant earnings per share improvement 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, NUMEREX CORP turned its bottom line around by earning $0.11 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.11).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 105.0% when compared to the same quarter one year prior, rising from $0.34 million to $0.70 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 13.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although NMRX's debt-to-equity ratio of 0.13 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $1.20 million or 6.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.78%.

Numerex Corp. provides business services, technology, and products used in the development and support of machine-to-machine solutions for the enterprise and government markets worldwide. The company has a P/E ratio of 74.5, above the average telecommunications industry P/E ratio of 66.5 and above the S&P 500 P/E ratio of 17.7. Numerex has a market cap of $153.9 million and is part of the

technology

sector and

telecommunications

industry. Shares are up 26.4% year to date as of the close of trading on Monday.

You can view the full

Numerex Ratings Report

or get investment ideas from our

investment research center

.

-- 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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