NEW YORK ( TheStreet) -- Level three Communications (NYSE: LVLT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, deteriorating net income and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- LVLT's very impressive revenue growth greatly exceeded the industry average of 3.6%. Since the same quarter one year prior, revenues leaped by 71.4%. 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.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The change in net income from the same quarter one year ago has exceeded that of the Diversified Telecommunication Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 213.5% when compared to the same quarter one year ago, falling from -$52.00 million to -$163.00 million.
- The debt-to-equity ratio is very high at 7.08 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, LVLT maintains a poor quick ratio of 0.95, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet RatingsStaff