NEW YORK ( TheStreet) -- American Science & Engineering (Nasdaq: ASEI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- ASEI's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.77, which clearly demonstrates the ability to cover short-term cash needs.
- 48.40% is the gross profit margin for AMERICAN SCIENCE ENGINEERING which we consider to be strong. Regardless of ASEI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ASEI's net profit margin of 12.50% compares favorably to the industry average.
- The revenue fell significantly faster than the industry average of 0.1%. Since the same quarter one year prior, revenues fell by 32.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- AMERICAN SCIENCE ENGINEERING has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, AMERICAN SCIENCE ENGINEERING increased its bottom line by earning $4.64 versus $3.97 in the prior year. For the next year, the market is expecting a contraction of 35.8% in earnings ($2.98 versus $4.64).
- Net operating cash flow has decreased to $11.39 million or 28.68% when compared to the same quarter last year. Despite a decrease in cash flow of 28.68%, AMERICAN SCIENCE ENGINEERING is in line with the industry average cash flow growth rate of -29.23%.