NEW YORK ( TheStreet) -- Aware (Nasdaq: AWRE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 1589.5% when compared to the same quarter one year prior, rising from $0.08 million to $1.28 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.9%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AWRE 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 this, the company maintains a quick ratio of 18.65, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for AWARE INC is currently very high, coming in at 81.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.00% is above that of the industry average.
  • AWARE INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AWARE INC reported lower earnings of $0.00 versus $0.06 in the prior year.

Aware, Inc. provides products for the biometrics and Digital Subscriber Line (DSL) test industries in the United States, Germany, and internationally. The company has a P/E ratio of 31.8, equal to the average telecommunications industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Aware has a market cap of $58.9 million and is part of the technology sector and telecommunications industry. Shares are up 4.6% year to date as of the close of trading on Monday.

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

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