NEW YORK ( TheStreet) -- Staar Surgical (Nasdaq: STAA) 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, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- STAA's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, STAA has a quick ratio of 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.
- STAAR SURGICAL CO reported significant earnings per share improvement 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, STAAR SURGICAL CO continued to lose money by earning -$0.12 versus -$0.21 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus -$0.12).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 106.7% when compared to the same quarter one year prior, rising from -$1.16 million to $0.08 million.
- Net operating cash flow has significantly increased by 432.40% to $2.50 million when compared to the same quarter last year. In addition, STAAR SURGICAL CO has also vastly surpassed the industry average cash flow growth rate of 1.42%.