NEW YORK ( TheStreet) -- Steinway Musical Instruments (NYSE: LVB) 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, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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. Compared to other companies in the Leisure Equipment & Products industry and the overall market, STEINWAY MUSICAL INSTRS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • STEINWAY MUSICAL INSTRS INC's earnings per share declined by 36.4% 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, STEINWAY MUSICAL INSTRS INC increased its bottom line by earning $0.68 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.68).
  • 35.40% is the gross profit margin for STEINWAY MUSICAL INSTRS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.80% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.02, which clearly demonstrates the ability to cover short-term cash needs.
  • LVB's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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.

Steinway Musical Instruments, Inc. designs, manufactures, markets, and distributes musical instruments in the United States and internationally. The company operates through two segments: Pianos, and Band & Orchestral Instruments. The company has a P/E ratio of 32.6, equal to the average consumer durables industry P/E ratio and above the S&P 500 P/E ratio of 16.6. Steinway Musical Instruments has a market cap of $256.3 million and is part of the consumer goods sector and consumer durables industry. Shares are up 6.6% year to date as of the close of trading on Monday.

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