NEW YORK ( TheStreet) -- GrafTech International (NYSE: GTI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, compelling growth in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 35.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GTI's debt-to-equity ratio is very low at 0.27 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 1.09, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 54.8% when compared to the same quarter one year prior, rising from $26.04 million to $40.30 million.
  • Net operating cash flow has increased to $47.26 million or 17.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -25.33%.
  • GRAFTECH INTERNATIONAL LTD has improved earnings per share by 33.3% 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, GRAFTECH INTERNATIONAL LTD increased its bottom line by earning $1.40 versus $0.10 in the prior year. For the next year, the market is expecting a contraction of 31.1% in earnings ($0.97 versus $1.40).

GrafTech International Ltd. manufactures and sells synthetic and natural graphite and carbon based products. The company operates in two segments, Industrial Materials and Engineered Solutions. The company has a P/E ratio of 12.3, above the average industrial industry P/E ratio of 11.8 and below the S&P 500 P/E ratio of 17.7. GrafTech International has a market cap of $2.2 billion and is part of the industrial goods sector and industrial industry. Shares are down 20.9% year to date as of the close of trading on Friday.

You can view the full GrafTech International Ratings Report or get investment ideas from our investment research center.
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