NEW YORK ( TheStreet) -- Chase Corporation (AMEX: CCF) has been upgraded by TheStreet Ratings from hold to buy. The company's strongest point has been its expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- CHASE CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, CHASE CORP increased its bottom line by earning $1.21 versus $1.17 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.21).
- CCF, with its decline in revenue, underperformed when compared the industry average of 13.3%. Since the same quarter one year prior, revenues slightly dropped by 7.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CCF has underperformed the S&P 500 Index, declining 17.57% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The gross profit margin for CHASE CORP is currently lower than what is desirable, coming in at 34.40%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 11.00% is above that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has decreased by 17.1% when compared to the same quarter one year ago, dropping from $4.37 million to $3.62 million.