NEW YORK ( TheStreet) -- Exactech (Nasdaq: EXAC) 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, good cash flow from operations 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:
  • EXACTECH INC's earnings per share declined by 12.0% 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, EXACTECH INC increased its bottom line by earning $0.80 versus $0.64 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $0.80).
  • The gross profit margin for EXACTECH INC is rather high; currently it is at 69.40%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EXAC's net profit margin of 5.60% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 87.43% to $3.54 million when compared to the same quarter last year. In addition, EXACTECH INC has also vastly surpassed the industry average cash flow growth rate of -14.78%.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EXAC has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • EXAC's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 8.7%. 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.

Exactech, Inc. develops, manufactures, markets, distributes, and sells orthopedic implant devices and related surgical instrumentation, as well as offers biologic services to hospitals and physicians in the United States and internationally. The company has a P/E ratio of 23.1, equal to the average health services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Exactech has a market cap of $233.1 million and is part of the health care sector and health services industry. Shares are down 5.3% year to date as of the close of trading on Tuesday.

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