NEW YORK ( TheStreet) -- Deer Consumer Products (Nasdaq: DEER) 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, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 23.0%. Since the same quarter one year prior, revenues rose by 32.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DEER's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.79, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Durables industry and the overall market, DEER CONSUMER PRODUCTS INC's return on equity exceeds that of both the industry average and the S&P 500.
- DEER CONSUMER PRODUCTS INC has improved earnings per share by 39.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DEER CONSUMER PRODUCTS INC increased its bottom line by earning $0.91 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $0.91).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 43.0% when compared to the same quarter one year prior, rising from $9.27 million to $13.25 million.