NEW YORK ( TheStreet) -- Asset Acceptance Capital Corporation (Nasdaq: AACC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 19.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ASSET ACCEPTANCE CAPITL CP 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, ASSET ACCEPTANCE CAPITL CP turned its bottom line around by earning $0.40 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus $0.40).
- AACC has underperformed the S&P 500 Index, declining 23.56% 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.
- The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management.
-- Written by a member of TheStreet RatingsStaff