NEW YORK ( TheStreet) -- Multimedia Games Inc (Nasdaq: MGAM) 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, reasonable valuation levels, compelling growth in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.93 is very high and demonstrates very strong liquidity.
  • Net operating cash flow has significantly increased by 83.20% to $29.24 million when compared to the same quarter last year. In addition, MULTIMEDIA GAMES HOLDING CO has also vastly surpassed the industry average cash flow growth rate of -83.82%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 668.9% when compared to the same quarter one year prior, rising from $0.36 million to $2.77 million.
  • MGAM's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Multimedia Games, Inc., together with its subsidiaries, engages in the development and supply of comprehensive systems, content, electronic games, and player terminals for the casino, charity, international bingo, and video lottery markets in the United States and Internationally. The company has a P/E ratio of 9.6, below the average leisure industry P/E ratio of 9.8 and below the S&P 500 P/E ratio of 17.7. Multimedia Games has a market cap of $113.8 million and is part of the services sector and leisure industry. Shares are down 23.7% year to date as of the close of trading on Friday.

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