NEW YORK ( TheStreet) -- Merit Medical Systems (Nasdaq: MMSI) 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, good cash flow from operations, expanding profit margins, 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 has had sub par growth in net income.

Highlights from the ratings report include:
  • MERIT MEDICAL SYSTEMS INC's earnings per share declined by 16.7% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, MERIT MEDICAL SYSTEMS INC reported lower earnings of $0.44 versus $0.79 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.44).
  • Compared to its closing price of one year ago, MMSI's share price has jumped by 32.26%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for MERIT MEDICAL SYSTEMS INC is rather high; currently it is at 50.10%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MMSI's net profit margin of 5.20% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 115.33% to $14.14 million when compared to the same quarter last year. In addition, MERIT MEDICAL SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of -10.53%.
  • The revenue growth came in higher than the industry average of 0.1%. Since the same quarter one year prior, revenues rose by 20.3%. 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.

Merit Medical Systems, Inc. designs, develops, manufactures, and markets single-use medical products for interventional and diagnostic procedures worldwide. The company's cardiology and radiology products include percutaneous coronary interventions and percutaneous peripheral interventions. The company has a P/E ratio of 46.2, equal to the average health services industry P/E ratio and above the S&P 500 P/E ratio of 16.2. Merit Medical Systems has a market cap of $566.2 million and is part of the health care sector and health services industry. Shares are up 25.3% year to date as of the close of trading on Monday.

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