NEW YORK ( TheStreet) -- Charles & Colvard (Nasdaq: CTHR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- CTHR's very impressive revenue growth greatly exceeded the industry average of 15.9%. Since the same quarter one year prior, revenues leaped by 104.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CTHR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.89, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 338.5% when compared to the same quarter one year prior, rising from $0.41 million to $1.80 million.
- Net operating cash flow has significantly increased by 155.37% to $1.61 million when compared to the same quarter last year. In addition, CHARLES & COLVARD LTD has also vastly surpassed the industry average cash flow growth rate of 36.89%.
- The gross profit margin for CHARLES & COLVARD LTD is rather high; currently it is at 58.60%. Regardless of CTHR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTHR's net profit margin of 25.10% significantly outperformed against the industry.
-- Written by a member of TheStreet RatingsStaff