NEW YORK ( TheStreet) -- Zygo Corporation (Nasdaq: ZIGO) 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, expanding profit margins 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:
  • The revenue growth came in higher than the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 49.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ZIGO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.38, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Electronic Equipment, Instruments & Components industry and the overall market, ZYGO CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ZYGO CORP is rather high; currently it is at 52.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.30% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $7.85 million or 11.56% when compared to the same quarter last year. In addition, ZYGO CORP has also vastly surpassed the industry average cash flow growth rate of -69.91%.

Zygo Corporation designs, develops, and manufactures ultra-high precision measurement solutions to enhance its customers' manufacturing yields, and optical sub-systems and components for original equipment manufacturer and end-user applications in the Americas, the Far East, and Europe. The company has a P/E ratio of 13.9, above the average electronics industry P/E ratio of 13.3 and below the S&P 500 P/E ratio of 17.7. Zygo has a market cap of $250.3 million and is part of the technology sector and electronics industry. Shares are up 14.6% year to date as of the close of trading on Wednesday.

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