NEW YORK ( TheStreet) -- Kaydon Corporation (NYSE: KDN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- KAYDON CORP has improved earnings per share by 15.4% 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. During the past fiscal year, KAYDON CORP increased its bottom line by earning $1.67 versus $1.37 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.67).
- KDN's revenue growth trails the industry average of 30.7%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- KDN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.29, which clearly demonstrates the ability to cover short-term cash needs.
- 40.70% is the gross profit margin for KAYDON CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.90% is above that of the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Machinery industry average. The net income increased by 10.8% when compared to the same quarter one year prior, going from $13.09 million to $14.50 million.