NEW YORK ( TheStreet) -- Heritage-Crystal Clean (Nasdaq: HCCI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 39.3%. 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.
- Although HCCI's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $4.52 million or 32.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.10%.
- Compared to its closing price of one year ago, HCCI's share price has jumped by 94.05%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- HERITAGE-CRYSTAL CLEAN INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HERITAGE-CRYSTAL CLEAN INC increased its bottom line by earning $0.26 versus $0.17 in the prior year. For the next year, the market is expecting a contraction of 34.6% in earnings ($0.17 versus $0.26).