NEW YORK ( TheStreet) -- Ultralife Batteries (Nasdaq: ULBI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- ULTRALIFE CORP reported significant earnings per share improvement 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ULTRALIFE CORP turned its bottom line around by earning $0.10 versus -$0.18 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.10).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 116.2% when compared to the same quarter one year prior, rising from -$11.01 million to $1.78 million.
- The revenue fell significantly faster than the industry average of 4.8%. Since the same quarter one year prior, revenues fell by 37.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for ULTRALIFE CORP is currently lower than what is desirable, coming in at 30.00%. Regardless of ULBI'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 5.70% trails the industry average.
- ULBI has underperformed the S&P 500 Index, declining 23.70% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet RatingsStaff