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 (
-- Proto Labs
) 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 17.5%. Since the same quarter one year prior, revenues rose by 31.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PRLB's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.15, which clearly demonstrates the ability to cover short-term cash needs.
- PROTO LABS INC has improved earnings per share by 24.1% 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 two years. We feel that this trend should continue. During the past fiscal year, PROTO LABS INC increased its bottom line by earning $1.35 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus $1.35).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 28.6% when compared to the same quarter one year prior, rising from $7.40 million to $9.51 million.
- Net operating cash flow has significantly increased by 124.00% to $13.54 million when compared to the same quarter last year. In addition, PROTO LABS INC has also vastly surpassed the industry average cash flow growth rate of 24.28%.
Proto Labs, Inc., together with its subsidiaries, manufactures computer numerical control (CNC) machined and injection molded custom parts for prototyping and short-run production. Proto has a market cap of $2.04 billion and is part of the industrial goods sector and industrial industry. Shares are up 11.8% year to date as of the close of trading on Wednesday.
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