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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link

.

NEW YORK (

TheStreet

)

-- PhotoMedex

(Nasdaq:

PHMD

) 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, attractive valuation levels, expanding profit margins and increase in stock price during the past year. 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:

  • The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 15.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • PHMD's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The gross profit margin for PHOTOMEDEX INC is currently very high, coming in at 79.98%. Regardless of PHMD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PHMD's net profit margin of 5.01% is significantly lower than the industry average.
  • PHOTOMEDEX INC's earnings per share declined by 40.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PHOTOMEDEX INC reported lower earnings of $0.88 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.88).

PhotoMedex, Inc., a skin health company, provides integrated disease management and aesthetic solutions to dermatologists, professional aestheticians, and consumers in North America, the Asia Pacific, Europe, and South America. PhotoMedex has a market cap of $295.2 million and is part of the health care sector and health services industry. Shares are up 14.7% year to date as of the close of trading on Monday.

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PhotoMedex Ratings Report

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.