NEW YORK ( TheStreet) -- Home Inns & Hotels Management (Nasdaq: HMIN) 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, largely solid financial position with reasonable debt levels by most measures, 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, HOME INNS & HOTELS MNGT -ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- HOME INNS & HOTELS MNGT -ADR'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, HOME INNS & HOTELS MNGT -ADR increased its bottom line by earning $1.28 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.28).
- Compared to its closing price of one year ago, HMIN's share price has jumped by 26.35%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.93, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 22.9%. 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.