NEW YORK ( TheStreet) -- American Pacific Corporation (Nasdaq: APFC) 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, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally poor debt management. Highlights from the ratings report include:
- APFC's very impressive revenue growth greatly exceeded the industry average of 14.9%. Since the same quarter one year prior, revenues leaped by 77.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 122.72% and other important driving factors, this stock has surged by 27.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- 43.10% is the gross profit margin for AMERICAN PACIFIC CORP which we consider to be strong. Regardless of APFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.70% trails the industry average.
- The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Even though the debt-to-equity ratio is weak, APFC's quick ratio is somewhat strong at 1.42, demonstrating the ability to handle short-term liquidity needs.
- 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 Chemicals industry and the overall market, AMERICAN PACIFIC CORP's return on equity significantly trails that of both the industry average and the S&P 500.