NEW YORK ( TheStreet) -- General Communication (Nasdaq: GNCMA) 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, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, GENERAL COMMUNICATION's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for GENERAL COMMUNICATION is rather high; currently it is at 67.40%. Regardless of GNCMA'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 0.90% trails the industry average.
- Compared to its closing price of one year ago, GNCMA's share price has jumped by 85.43%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- GENERAL COMMUNICATION reported flat earnings per share in the most recent quarter. 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, GENERAL COMMUNICATION increased its bottom line by earning $0.16 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.16).
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.