NEW YORK ( TheStreet) -- Argan (AMEX: AGX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- AGX 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 2.58, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 190.66% to $26.93 million when compared to the same quarter last year. In addition, ARGAN INC has also vastly surpassed the industry average cash flow growth rate of -23.48%.
- Compared to its closing price of one year ago, AGX's share price has jumped by 70.46%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- ARGAN INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ARGAN INC increased its bottom line by earning $0.73 versus $0.51 in the prior year.
- The revenue fell significantly faster than the industry average of 22.2%. Since the same quarter one year prior, revenues fell by 49.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.