NEW YORK ( TheStreet) -- American Railcar Industries (Nasdaq: ARII) 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- ARII's very impressive revenue growth greatly exceeded the industry average of 19.1%. Since the same quarter one year prior, revenues leaped by 114.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 3.49, which clearly demonstrates the ability to cover short-term cash needs.
- AMERICAN RAILCAR INDS 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, AMERICAN RAILCAR INDS INC turned its bottom line around by earning $0.21 versus -$1.27 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 325.3% when compared to the same quarter one year prior, rising from -$5.33 million to $12.00 million.
- Net operating cash flow has significantly increased by 294.77% to $7.65 million when compared to the same quarter last year. In addition, AMERICAN RAILCAR INDS INC has also vastly surpassed the industry average cash flow growth rate of -77.32%.
-- Written by a member of TheStreet RatingsStaff