NEW YORK ( TheStreet) -- Black Diamond (Nasdaq: BDE) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good. 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 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- BDE's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BDE has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to -$8.89 million or 20.76% when compared to the same quarter last year. Despite an increase in cash flow, BLACK DIAMOND INC's cash flow growth rate is still lower than the industry average growth rate of 59.53%.
- BLACK DIAMOND INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. For the next year, the market is expecting a contraction of 98.6% in earnings ($0.04 versus $2.86).
- After a year of stock price fluctuations, the net result is that BDE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.