NEW YORK ( TheStreet) -- SK Telecom (NYSE: SKM) 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, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- SK TELECOM CO LTD's earnings per share declined by 10.0% 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, SK TELECOM CO LTD increased its bottom line by earning $1.62 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.62).
- When compared to other companies in the Wireless Telecommunication Services industry and the overall market, SK TELECOM CO LTD's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for SK TELECOM CO LTD is currently very high, coming in at 77.40%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SKM's net profit margin of 11.40% significantly trails the industry average.
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- The revenue growth significantly trails the industry average of 57.8%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.