NEW YORK ( TheStreet) -- Williams Controls (Nasdaq: WMCO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- WILLIAMS CONTROLS INC 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 year. During the past fiscal year, WILLIAMS CONTROLS INC turned its bottom line around by earning $0.18 versus -$0.28 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Auto Components industry. The net income increased by 66.7% when compared to the same quarter one year prior, rising from $0.90 million to $1.51 million.
- Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 30.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WMCO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- WMCO's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 21.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.