NEW YORK ( TheStreet) -- Artesian Resource Corp (Nasdaq: ARTNA) 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, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to $4.84 million or 2.45% when compared to the same quarter last year. Despite a decrease in cash flow of 2.45%, ARTESIAN RESOURCES is still significantly exceeding the industry average of -72.83%.
  • 36.50% is the gross profit margin for ARTESIAN RESOURCES which we consider to be strong. Regardless of ARTNA'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 8.00% trails the industry average.
  • 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 Water Utilities industry and the overall market on the basis of return on equity, ARTESIAN RESOURCES has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ARTESIAN RESOURCES's earnings per share declined by 15.0% 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, ARTESIAN RESOURCES increased its bottom line by earning $1.01 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $1.01).
  • The revenue growth significantly trails the industry average of 92.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. 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.

Artesian Resources Corporation, through its subsidiaries, provides water, wastewater, and engineering services on the Delmarva Peninsula. The company has a P/E ratio of 18.9, equal to the average utilities industry P/E ratio and above the S&P 500 P/E ratio of 16.9. Artesian Resource has a market cap of $128 million and is part of the utilities sector and utilities industry. Shares are down 0.3% year to date as of the previous trading day's close.

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

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