NEW YORK ( TheStreet) -- Eaton Vance Corporation (NYSE: EV) 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market, EATON VANCE CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Even though the current debt-to-equity ratio is 1.08, it is still below the industry average, suggesting that this level of debt is acceptable within the Capital Markets industry.
  • EATON VANCE CORP's earnings per share declined by 18.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EATON VANCE CORP increased its bottom line by earning $1.41 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.41).
  • Net operating cash flow has slightly increased to $58.14 million or 4.01% when compared to the same quarter last year. In addition, EATON VANCE CORP has also vastly surpassed the industry average cash flow growth rate of -138.94%.
  • EV's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 14.8%. 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.

Eaton Vance Corp., through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. The company has a P/E ratio of 24.6, above the average financial services industry P/E ratio of 24.5 and above the S&P 500 P/E ratio of 16.8. Eaton Vance has a market cap of $3.9 billion and is part of the financial sector and financial services industry. Shares are up 10% year to date as of the close of trading on Wednesday.

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

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