NEW YORK ( TheStreet) -- CE Franklin (Nasdaq: CFK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 58.33% and other important driving factors, this stock has surged by 41.88% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • CFK's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
  • The revenue growth significantly trails the industry average of 46.2%. Since the same quarter one year prior, revenues rose by 13.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Energy Equipment & Services industry average. The net income increased by 52.9% when compared to the same quarter one year prior, rising from $2.21 million to $3.38 million.

CE Franklin Ltd. distributes oilfield equipment products and services principally to the oil and gas industry in Canada. The company supplies pipes, valves, flanges, fittings, production equipment, tubular products, and other general oilfield supplies. The company has a P/E ratio of 23.4, below the average wholesale industry P/E ratio of 28.9 and above the S&P 500 P/E ratio of 17. CE Franklin has a market cap of $172.5 million and is part of the services sector and wholesale industry. Shares are up 35.2% year to date as of the close of trading on Friday.

You can view the full CE Franklin Ratings Report or get investment ideas from our investment research center.
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