NEW YORK ( TheStreet) -- CPI Aerostructures (AMEX: CVU) 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, increase in net income, largely solid financial position with reasonable debt levels by most measures, solid stock price performance 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 came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 28.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 26.3% when compared to the same quarter one year prior, rising from $1.43 million to $1.81 million.
  • CVU's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.36 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CPI AEROSTRUCTURES INC has improved earnings per share by 19.0% in the most recent quarter compared to the same quarter a year ago. 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, CPI AEROSTRUCTURES INC reported lower earnings of $0.09 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.09).

CPI Aerostructures, Inc. engages in the contract production of structural and other aircraft parts for prime defense contractors, the United States Air Force, and other branches of the armed forces. The company has a P/E ratio of 61, below the average aerospace/defense industry P/E ratio of 75.3 and above the S&P 500 P/E ratio of 17.7. CPI Aerostructures has a market cap of $88.5 million and is part of the industrial goods sector and aerospace/defense industry. Shares are down 9.2% year to date as of the close of trading on Thursday.

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