NEW YORK ( TheStreet) -- Olympic Steel (Nasdaq: ZEUS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 503.3% when compared to the same quarter one year prior, rising from $1.71 million to $10.32 million.
- OLYMPIC STEEL INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, OLYMPIC STEEL INC turned its bottom line around by earning $0.20 versus -$5.63 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $0.20).
- Although ZEUS's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average.
- ZEUS's very impressive revenue growth exceeded the industry average of 46.8%. Since the same quarter one year prior, revenues leaped by 75.3%. Growth in the company's revenue appears to have helped boost the earnings per share.