NEW YORK ( TheStreet) -- BT Group (NYSE: BT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, solid stock price performance, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Highlights from the ratings report include:
- Compared to other companies in the Diversified Telecommunication Services industry and the overall market, BT GROUP PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- BT GROUP PLC has improved earnings per share by 13.4% 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 two years. We feel that this trend should continue. During the past fiscal year, BT GROUP PLC increased its bottom line by earning $2.97 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($3.87 versus $2.97).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Diversified Telecommunication Services industry average, but is less than that of the S&P 500. The net income increased by 16.1% when compared to the same quarter one year prior, going from $649.93 million to $754.77 million.
- BT, with its decline in revenue, underperformed when compared the industry average of 11.8%. Since the same quarter one year prior, revenues slightly dropped by 9.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.