NEW YORK ( TheStreet) -- Summer Infant (Nasdaq: SUMR) 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in net income. 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 4.1%. Since the same quarter one year prior, revenues rose by 27.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 183.21% to $5.22 million when compared to the same quarter last year. In addition, SUMMER INFANT INC has also vastly surpassed the industry average cash flow growth rate of 59.53%.
- SUMMER INFANT INC's earnings per share declined by 15.4% 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, SUMMER INFANT INC increased its bottom line by earning $0.40 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.40).
- SUMR's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.37 is sturdy.
- 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 the Leisure Equipment & Products industry average. The net income increased by 0.1% when compared to the same quarter one year prior, going from $2.08 million to $2.08 million.