NEW YORK ( TheStreet) -- Telephone and Data Systems (NYSE: TDS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and impressive record of earnings per share growth. 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 greatly exceeded that of the S&P 500, but is less than that of the Wireless Telecommunication Services industry average. The net income increased by 72.1% when compared to the same quarter one year prior, rising from $41.42 million to $71.29 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, TDS has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 65.98% to $435.60 million when compared to the same quarter last year. In addition, TELEPHONE & DATA SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of 10.01%.
- TELEPHONE & DATA SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TELEPHONE & DATA SYSTEMS INC reported lower earnings of $1.27 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($2.03 versus $1.27).