NEW YORK ( TheStreet) -- Grand Canyon Education (Nasdaq: LOPE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Consumer Services industry average. The net income increased by 19.8% when compared to the same quarter one year prior, going from $10.74 million to $12.87 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for GRAND CANYON EDUCATION INC is rather high; currently it is at 59.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.80% is above that of the industry average.
- GRAND CANYON EDUCATION INC has improved earnings per share by 26.1% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, GRAND CANYON EDUCATION INC reported lower earnings of $0.59 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.59).
- Although LOPE's debt-to-equity ratio of 0.16 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.