NEW YORK ( TheStreet) -- Coherent (Nasdaq: COHR) 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, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- COHR's revenue growth has slightly outpaced the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 26.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- COHR's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, COHR has a quick ratio of 2.34, which demonstrates the ability of the company to cover short-term liquidity needs.
- COHERENT INC has improved earnings per share by 29.8% 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. During the past fiscal year, COHERENT INC turned its bottom line around by earning $1.47 versus -$1.46 in the prior year. This year, the market expects an improvement in earnings ($3.37 versus $1.47).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electronic Equipment, Instruments & Components industry average. The net income increased by 32.1% when compared to the same quarter one year prior, rising from $14.40 million to $19.02 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.