NEW YORK ( TheStreet) -- SRS Labs (Nasdaq: SRSL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 22.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SRSL 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 11.72, 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 Software industry. The net income increased by 271.3% when compared to the same quarter one year prior, rising from -$0.43 million to $0.74 million.
- SRS LABS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SRS LABS INC reported lower earnings of $0.07 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.07).
- The gross profit margin for SRS LABS INC is currently extremely low, coming in at 8.00%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SRSL's net profit margin of 8.50% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet RatingsStaff