NEW YORK ( TheStreet) -- Legg Mason (NYSE: LM) 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 good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- LM's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LM has a quick ratio of 2.32, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 399.03% to $165.51 million when compared to the same quarter last year. In addition, LEGG MASON INC has also vastly surpassed the industry average cash flow growth rate of 146.67%.
- Despite the weak revenue results, LM has outperformed against the industry average of 43.0%. Since the same quarter one year prior, revenues fell by 13.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- LEGG MASON 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, LEGG MASON INC increased its bottom line by earning $1.66 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 13.3% in earnings ($1.44 versus $1.66).
- The gross profit margin for LEGG MASON INC is rather low; currently it is at 22.30%. Regardless of LM'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 4.40% trails the industry average.
-- Written by a member of TheStreet RatingsStaff