NEW YORK ( TheStreet) -- Astec Industries (Nasdaq: ASTE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- ASTE's revenue growth trails the industry average of 30.8%. Since the same quarter one year prior, revenues rose by 20.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ASTE 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- ASTEC INDUSTRIES INC has improved earnings per share by 6.3% 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. We feel that this trend should continue. During the past fiscal year, ASTEC INDUSTRIES INC increased its bottom line by earning $1.42 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.42).
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Machinery industry average. The net income increased by 4.9% when compared to the same quarter one year prior, going from $7.36 million to $7.72 million.