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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 increase in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 587.0% when compared to the same quarter one year prior, rising from -$2.46 million to $11.98 million.
- The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TA's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- TRAVELCENTERS OF AMERICA LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TRAVELCENTERS OF AMERICA LLC reported lower earnings of $1.06 versus $1.13 in the prior year. For the next year, the market is expecting a contraction of 22.6% in earnings ($0.82 versus $1.06).
TravelCenters of America LLC operates and franchises travel centers primarily along the United States interstate highway system. TravelCenters of America has a market cap of $311.2 million and is part of the services sector and specialty retail industry. Shares are down 12.3% year to date as of the close of trading on Friday.
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