NEW YORK ( TheStreet) -- Cumulus Media (Nasdaq: CMLS) 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, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally poor debt management. Highlights from the ratings report include:
- CMLS's very impressive revenue growth greatly exceeded the industry average of 20.0%. Since the same quarter one year prior, revenues leaped by 96.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to other companies in the Media industry and the overall market on the basis of return on equity, CUMULUS MEDIA INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Net operating cash flow has increased to $12.01 million or 10.38% when compared to the same quarter last year. Despite an increase in cash flow, CUMULUS MEDIA INC's average is still marginally south of the industry average growth rate of 11.51%.
- CMLS has underperformed the S&P 500 Index, declining 16.49% from its price level of one year ago. 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.
- The debt-to-equity ratio is very high at 6.95 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, CMLS has managed to keep a strong quick ratio of 1.74, which demonstrates the ability to cover short-term cash needs.