NEW YORK ( TheStreet) -- SAIC (NYSE: SAI) 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, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, SAIC INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Net operating cash flow has significantly increased by 68.62% to $172.00 million when compared to the same quarter last year. In addition, SAIC INC has also vastly surpassed the industry average cash flow growth rate of 10.88%.
  • The debt-to-equity ratio is somewhat low, currently at 0.74, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, SAI has a quick ratio of 2.00, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

SAIC, Inc. provides scientific, engineering, systems integration, and technical services and solutions to various branches of the U.S. military, agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security and the other U.S. The company has a P/E ratio of 11.1, above the average diversified services industry P/E ratio of 10.2 and below the S&P 500 P/E ratio of 16.2. SAIC has a market cap of $6.2 billion and is part of the services sector and diversified services industry. Shares are up 6.6% year to date as of the close of trading on Monday.

You can view the full SAIC Ratings Report or get investment ideas from our investment research center.
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