NEW YORK ( TheStreet) -- ATA (Nasdaq: ATAI) 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, robust revenue growth, compelling growth in net income, expanding profit margins and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.65 is very high and demonstrates very strong liquidity.
  • ATAI's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 125.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ATA INC -ADS 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. We feel that this trend should continue. During the past fiscal year, ATA INC -ADS turned its bottom line around by earning $0.14 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus $0.14).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Consumer Services industry average. The net income increased by 111.4% when compared to the same quarter one year prior, rising from -$2.21 million to $0.25 million.
  • The gross profit margin for ATA INC -ADS is rather high; currently it is at 56.90%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, ATAI's net profit margin of 2.30% significantly trails the industry average.

ATA Inc., through its subsidiaries, provides computer-based testing services in the People's Republic of China. ATA has a market cap of $218.4 million and is part of the services sector and diversified services industry. Shares are up 172.1% year to date as of the close of trading on Monday.

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