NEW YORK ( TheStreet) -- Houston Wire & Cable Company (Nasdaq: HWCC) 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, growth in earnings per share, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
- Net operating cash flow has significantly increased by 187.80% to $2.62 million when compared to the same quarter last year. In addition, HOUSTON WIRE & CABLE CO has also vastly surpassed the industry average cash flow growth rate of 16.67%.
- HOUSTON WIRE & CABLE CO has improved earnings per share by 45.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, HOUSTON WIRE & CABLE CO increased its bottom line by earning $0.49 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.49).
- The debt-to-equity ratio is somewhat low, currently at 0.64, 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, HWCC has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
- HWCC's revenue growth has slightly outpaced the industry average of 47.1%. Since the same quarter one year prior, revenues rose by 47.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.