NEW YORK ( TheStreet) -- Cal-Maine Foods (Nasdaq: CALM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 53.2% when compared to the same quarter one year prior, rising from $15.19 million to $23.26 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 24.1%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CALM's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CALM has a quick ratio of 2.04, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 53.96% and other important driving factors, this stock has surged by 27.25% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CALM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.