NEW YORK ( TheStreet) -- AEP Industries (Nasdaq: AEPI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, robust revenue growth and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- 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. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Containers & Packaging industry. The net income increased by 354.3% when compared to the same quarter one year prior, rising from $2.09 million to $9.47 million.
- AEPI's revenue growth trails the industry average of 29.4%. Since the same quarter one year prior, revenues rose by 17.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AEP INDUSTRIES 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, AEP INDUSTRIES INC turned its bottom line around by earning $2.10 versus -$0.05 in the prior year. For the next year, the market is expecting a contraction of 62.9% in earnings ($0.78 versus $2.10).
- The gross profit margin for AEP INDUSTRIES INC is rather low; currently it is at 15.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.60% trails that of the industry average.