NEW YORK ( TheStreet) -- American Medical Alert (Nasdaq: AMAC) 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, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 6.3%. 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.
- AMAC's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.09, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 109.24% to $1.45 million when compared to the same quarter last year. In addition, AMERICAN MEDICAL ALERT CORP has also vastly surpassed the industry average cash flow growth rate of 22.86%.
- Compared to its closing price of one year ago, AMAC's share price has jumped by 37.54%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- The gross profit margin for AMERICAN MEDICAL ALERT CORP is rather high; currently it is at 59.80%. Regardless of AMAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.50% trails the industry average.