NEW YORK ( TheStreet) -- Park Electrochemical Corp (NYSE: PKE) 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 and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- PKE 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 12.60, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue fell significantly faster than the industry average of 38.6%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Electronic Equipment, Instruments & Components industry average, but is less than that of the S&P 500. The net income has decreased by 18.8% when compared to the same quarter one year ago, dropping from $9.45 million to $7.67 million.
- After a year of stock price fluctuations, the net result is that PKE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- PARK ELECTROCHEMICAL CORP's earnings per share declined by 19.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PARK ELECTROCHEMICAL CORP increased its bottom line by earning $1.58 versus $1.23 in the prior year. For the next year, the market is expecting a contraction of 7.3% in earnings ($1.47 versus $1.58).