NEW YORK ( TheStreet) -- Saga Communications (AMEX: SGA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • SAGA COMMUNICATIONS's earnings per share declined by 13.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SAGA COMMUNICATIONS turned its bottom line around by earning $3.57 versus -$0.62 in the prior year. For the next year, the market is expecting a contraction of 10.2% in earnings ($3.21 versus $3.57).
  • 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. Compared to other companies in the Media industry and the overall market, SAGA COMMUNICATIONS's return on equity exceeds that of both the industry average and the S&P 500.
  • SGA's revenue growth trails the industry average of 17.5%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, SGA's share price has jumped by 33.88%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.

Saga Communications, Inc., a broadcast company, primarily engages in acquiring, developing, and operating radio and television stations. The company's radio stations employ various programming formats, including classic hits, adult contemporary, classic rock, news/talk, and country. The company has a P/E ratio of 9.4, equal to the average media industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Saga has a market cap of $109.9 million and is part of the services sector and media industry. Shares are up 15.3% year to date as of the close of trading on Friday.

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