NEW YORK ( TheStreet) -- West Marine (Nasdaq: WMAR) 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, attractive valuation levels, expanding profit margins, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • WEST MARINE INC has improved earnings per share by 26.3% 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, WEST MARINE INC reported lower earnings of $0.53 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.53).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Specialty Retail industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $35.12 million to $44.74 million.
  • 37.50% is the gross profit margin for WEST MARINE INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.00% significantly outperformed against the industry average.
  • The revenue growth came in higher than the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.

West Marine, Inc., together with its subsidiaries, operates as a specialty retailer of boating supplies primarily in the United States. It operates in three segments: Stores, Port Supply, and Direct Sales. The company has a P/E ratio of 12.3, below the average specialty retail industry P/E ratio of 24.6 and below the S&P 500 P/E ratio of 17.7. West Marine has a market cap of $234.3 million and is part of the services sector and specialty retail industry. Shares are down 3.1% year to date as of the close of trading on Monday.

You can view the full West Marine Ratings Report or get investment ideas from our investment research center.

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