NEW YORK ( TheStreet) -- PMFG (Nasdaq: PMFG) 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 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 came in higher than the industry average of 29.9%. Since the same quarter one year prior, revenues rose by 43.5%. 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.
- PMFG's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Compared to its closing price of one year ago, PMFG's share price has jumped by 53.93%, 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.
- PMFG INC 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, PMFG INC turned its bottom line around by earning $0.20 versus -$0.46 in the prior year. For the next year, the market is expecting a contraction of 132.5% in earnings (-$0.07 versus $0.20).
- The gross profit margin for PMFG INC is currently lower than what is desirable, coming in at 34.60%. Regardless of PMFG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.20% trails the industry average.