NEW YORK ( TheStreet) -- LoJack Corporation (Nasdaq: LOJN) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- In its most recent trading session, LOJN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, LOJACK CORP's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for LOJACK CORP is rather high; currently it is at 51.30%. Regardless of LOJN'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 0.60% trails the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 101.1% when compared to the same quarter one year prior, rising from -$18.20 million to $0.20 million.
- LOJACK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LOJACK CORP continued to lose money by earning -$1.07 versus -$2.02 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus -$1.07).