NEW YORK ( TheStreet) -- Exactech (Nasdaq: EXAC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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 8.4%. Since the same quarter one year prior, revenues rose by 12.5%. 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.
- The gross profit margin for EXACTECH INC is rather high; currently it is at 69.30%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EXAC's net profit margin of 2.80% significantly trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that EXAC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.97 is high and demonstrates strong liquidity.
- EXACTECH INC's earnings per share declined by 9.1% 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, EXACTECH INC increased its bottom line by earning $0.80 versus $0.64 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.80).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Equipment & Supplies industry and the overall market, EXACTECH INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff