NEW YORK ( TheStreet) -- Generac Holdings (NYSE: GNRC) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including premium valuation and generally poor debt management. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 49.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GENERAC HOLDINGS INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GENERAC HOLDINGS INC increased its bottom line by earning $0.85 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($2.02 versus $0.85).
- 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 Electrical Equipment industry and the overall market on the basis of return on equity, GENERAC HOLDINGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.57, which shows the ability to cover short-term cash needs.