NEW YORK ( TheStreet) -- Landec Corporation (Nasdaq: LNDC) 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, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Chemicals industry average, but is greater than that of the S&P 500. The net income increased by 32.5% when compared to the same quarter one year prior, rising from $1.73 million to $2.30 million.
- LANDEC CORP has improved earnings per share by 28.6% 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, LANDEC CORP reported lower earnings of $0.15 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($0.32 versus $0.15).
- Net operating cash flow has significantly increased by 260.93% to $10.37 million when compared to the same quarter last year. In addition, LANDEC CORP has also vastly surpassed the industry average cash flow growth rate of -98.14%.
- LNDC's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LNDC has a quick ratio of 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.
- LNDC's revenue growth has slightly outpaced the industry average of 25.3%. Since the same quarter one year prior, revenues rose by 26.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.