NEW YORK ( TheStreet) -- QC Holdings (Nasdaq: QCCO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, QCCO has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 396.75% to $5.51 million when compared to the same quarter last year. In addition, QC HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -22.47%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

QC Holdings, Inc. provides various retail consumer financial products and services in the United States. The company offers payday loans that provide cash to the customers in exchange for a promissory note with a maturity of two to three weeks. The company has a P/E ratio of 4.6, below the average banking industry P/E ratio of 7.1 and below the S&P 500 P/E ratio of 17.7. QC has a market cap of $68.8 million and is part of the financial sector and banking industry. Shares are up 6.1% year to date as of the close of trading on Friday.

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