NEW YORK ( TheStreet) -- Basic Sanitation Company of the State of Sa (NYSE: SBS) 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, notable return on equity, attractive valuation levels and good cash flow from operations. 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:
- SBS's very impressive revenue growth is slightly higher than the industry average of 52.2%. Since the same quarter one year prior, revenues leaped by 59.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Water Utilities industry and the overall market, CIA SANEAMENTO BASICO ESTADO's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 525.88% to $528.00 million when compared to the same quarter last year. In addition, CIA SANEAMENTO BASICO ESTADO has also vastly surpassed the industry average cash flow growth rate of 307.07%.