NEW YORK ( TheStreet) -- Addvantage Technologies Group (Nasdaq: AEY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share. Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.98, which clearly demonstrates the ability to cover short-term cash needs.
- AEY, with its decline in revenue, slightly underperformed the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 2.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $1.83 million or 11.83% when compared to the same quarter last year. Despite a decrease in cash flow ADDVANTAGE TECHNOLOGIES GP is still fairing well by exceeding its industry average cash flow growth rate of -43.89%.
- The share price of ADDVANTAGE TECHNOLOGIES GP has not done very well: it is down 21.32% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
-- Written by a member of TheStreet RatingsStaff