NEW YORK ( TheStreet) -- TAT Technologies (Nasdaq: TATT) has been upgraded by TheStreet Ratings from sell to hold. 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 and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Aerospace & Defense industry and the overall market, TAT TECHNOLOGIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- TATT has underperformed the S&P 500 Index, declining 20.51% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- TAT TECHNOLOGIES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TAT TECHNOLOGIES LTD swung to a loss, reporting -$0.81 versus $0.25 in the prior year.
- TATT's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TATT has a quick ratio of 2.08, which demonstrates the ability of the company to cover short-term liquidity needs.
- The revenue growth came in higher than the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.