NEW YORK ( TheStreet) -- Knight Capital Group (NYSE: KCG) 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 and increase in net income. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Highlights from the ratings report include:
- KCG's very impressive revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues leaped by 65.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 13168.5% when compared to the same quarter one year prior, rising from $0.20 million to $26.94 million.
- KNIGHT CAPITAL GROUP INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KNIGHT CAPITAL GROUP INC reported lower earnings of $0.98 versus $1.62 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.98).
- The gross profit margin for KNIGHT CAPITAL GROUP INC is rather low; currently it is at 24.60%. Regardless of KCG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.80% trails the industry average.
- This stock has managed to decline in share value by 2.00% over the past twelve months. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.