NEW YORK ( TheStreet) -- Owens Corning Incorporated (NYSE: OC) 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, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 22.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $193.00 million or 31.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.16%.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
  • OWENS CORNING 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, OWENS CORNING increased its bottom line by earning $7.28 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 69.4% in earnings ($2.23 versus $7.28).

Owens Corning, through its subsidiaries, provides composite and building materials systems worldwide. It operates in two segments, Composites and Building Materials. The company has a P/E ratio of 54, below the average materials & construction industry P/E ratio of 55.2 and above the S&P 500 P/E ratio of 17.7. Owens Corning has a market cap of $3.1 billion and is part of the industrial goods sector and materials & construction industry. Shares are down 12.6% year to date as of the close of trading on Thursday.

You can view the full Owens Corning Ratings Report or get investment ideas from our investment research center.
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