NEW YORK ( TheStreet) -- Neutral Tandem (Nasdaq: TNDM) 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, solid stock price performance 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:
- NEUTRAL TANDEM INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NEUTRAL TANDEM INC reported lower earnings of $0.97 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.97).
- 47.00% is the gross profit margin for NEUTRAL TANDEM INC which we consider to be strong. Regardless of TNDM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TNDM's net profit margin of 12.30% compares favorably to the industry average.
- Compared to its closing price of one year ago, TNDM's share price has jumped by 29.32%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TNDM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- TNDM 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 4.42, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue growth greatly exceeded the industry average of 13.6%. Since the same quarter one year prior, revenues rose by 48.1%. 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.