NEW YORK ( TheStreet) -- Hurco Companies (Nasdaq: HURC) 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, compelling growth in net income, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- HURCO COMPANIES INC reported significant earnings per share improvement 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, HURCO COMPANIES INC reported poor results of -$0.89 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus -$0.89).
- Powered by its strong earnings growth of 250.00% and other important driving factors, this stock has surged by 121.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively 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 Machinery industry. The net income increased by 249.3% when compared to the same quarter one year prior, rising from -$1.57 million to $2.35 million.
- HURC's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
- HURC's very impressive revenue growth exceeded the industry average of 52.2%. Since the same quarter one year prior, revenues leaped by 72.6%. Growth in the company's revenue appears to have helped boost the earnings per share.