NEW YORK ( TheStreet) -- Simpson Manufacturing (NYSE: SSD) 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, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- SIMPSON MANUFACTURING INC's earnings per share declined by 30.0% 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, SIMPSON MANUFACTURING INC increased its bottom line by earning $0.90 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $0.90).
- 46.70% is the gross profit margin for SIMPSON MANUFACTURING INC which we consider to be strong. Regardless of SSD's high profit margin, it has managed to decrease from the same period last year.
- 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 Building Products industry and the overall market on the basis of return on equity, SIMPSON MANUFACTURING INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SSD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.01, which clearly demonstrates the ability to cover short-term cash needs.
- SSD's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 7.0%. 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.