NEW YORK ( TheStreet) -- Wright Medical Group (Nasdaq: WMGI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.50 is very high and demonstrates very strong liquidity.
- WRIGHT MEDICAL GROUP INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WRIGHT MEDICAL GROUP INC swung to a loss, reporting -$0.14 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus -$0.14).
- WMGI, with its decline in revenue, slightly underperformed the industry average of 7.9%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for WRIGHT MEDICAL GROUP INC is rather high; currently it is at 67.50%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, WMGI's net profit margin of 0.90% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet RatingsStaff