NEW YORK ( TheStreet) -- Palomar Medical Technologies (Nasdaq: PMTI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- 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 853.4% when compared to the same quarter one year prior, rising from -$2.02 million to $15.25 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PALOMAR MED TECHNOLOGIES INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PALOMAR MED TECHNOLOGIES INC continued to lose money by earning -$0.48 versus -$0.58 in the prior year. For the next year, the market is expecting a contraction of 6.3% in earnings (-$0.51 versus -$0.48).
- 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. In comparison to the other companies in the Health Care Equipment & Supplies industry and the overall market, PALOMAR MED TECHNOLOGIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- PMTI has underperformed the S&P 500 Index, declining 17.25% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.