NEW YORK ( TheStreet) -- Interval Leisure Group (Nasdaq: IILG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, increase in net income, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The gross profit margin for INTERVAL LEISURE GROUP is rather high; currently it is at 66.40%. Regardless of IILG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.80% trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 37.9% when compared to the same quarter one year prior, rising from $4.64 million to $6.39 million.
  • INTERVAL LEISURE GROUP has improved earnings per share by 37.5% 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 two years. We feel that this trend should continue. During the past fiscal year, INTERVAL LEISURE GROUP increased its bottom line by earning $0.74 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.74).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

Interval Leisure Group, Inc., together with its subsidiaries, provides membership and leisure services to the vacation industry worldwide. The company operates through two segments, Interval and Aston. The company has a P/E ratio of 20.9, equal to the average diversified services industry P/E ratio and above the S&P 500 P/E ratio of 16.5. Interval Leisure Group has a market cap of $877.9 million and is part of the services sector and diversified services industry. Shares are down 6.8% year to date as of the close of trading on Monday.

You can view the full Interval Leisure Group Ratings Report or get investment ideas from our investment research center.
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