NEW YORK ( TheStreet) -- Sauer-Danfoss (NYSE: SHS) 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, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- SHS's revenue growth trails the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
- 36.70% is the gross profit margin for SAUER-DANFOSS INC which we consider to be strong. Regardless of SHS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SHS's net profit margin of 11.30% compares favorably to the industry average.
- SAUER-DANFOSS INC's earnings per share declined by 8.2% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SAUER-DANFOSS INC increased its bottom line by earning $4.75 versus $4.40 in the prior year.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, SAUER-DANFOSS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff