NEW YORK ( TheStreet) -- EMCOR Group (NYSE: EME) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins. 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 Construction & Engineering industry. The net income increased by 123.2% when compared to the same quarter one year prior, rising from -$175.63 million to $40.76 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 24.9%. Since the same quarter one year prior, revenues rose by 21.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- EME's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
- EMCOR GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, EMCOR GROUP INC swung to a loss, reporting -$1.35 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus -$1.35).