NEW YORK ( TheStreet) -- Knight Capital Group (NYSE: KCG) 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, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 30.1%. Since the same quarter one year prior, revenues rose by 31.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KNIGHT CAPITAL GROUP INC 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 year. We feel that this trend should continue. During the past fiscal year, KNIGHT CAPITAL GROUP INC increased its bottom line by earning $1.24 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.24).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 335.9% when compared to the same quarter one year prior, rising from $9.23 million to $40.24 million.
- After a year of stock price fluctuations, the net result is that KCG's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
-- Written by a member of TheStreet RatingsStaff