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 growth in earnings per share, revenue growth, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.0%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- RAILAMERICA INC has improved earnings per share by 13.3% 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, RAILAMERICA INC turned its bottom line around by earning $0.35 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.35).
- Net operating cash flow has significantly increased by 107.95% to $19.01 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 70.84%.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- RA's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RA's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.56 is high and demonstrates strong liquidity.
RailAmerica, Inc. engages in the ownership and operation of short line and regional freight railroads in North America. The company has a P/E ratio of 17.5, below the average transportation industry P/E ratio of 18.3 and below the S&P 500 P/E ratio of 17.7. RailAmerica has a market cap of $696 million and is part of the
industry. Shares are up 3.7% year to date as of the close of trading on Tuesday.
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