NEW YORK ( TheStreet) -- Supreme Industries (AMEX: STS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and poor profit margins.

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 Machinery industry. The net income increased by 975.3% when compared to the same quarter one year prior, rising from -$0.17 million to $1.52 million.
  • STS's revenue growth trails the industry average of 30.0%. Since the same quarter one year prior, revenues rose by 18.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SUPREME INDUSTRIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, SUPREME INDUSTRIES INC reported poor results of -$0.60 versus -$0.45 in the prior year.
  • In its most recent trading session, STS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Machinery industry and the overall market, SUPREME INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

Supreme Industries, Inc. and its subsidiaries manufacture and sell trucks, buses, and armored vehicles. Supreme has a market cap of $33.3 million and is part of the consumer goods sector and automotive industry. Shares are down 18.2% year to date as of the close of trading on Tuesday.

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