NEW YORK ( TheStreet) -- Steinway Musical Instruments (NYSE: LVB) 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, growth in earnings per share and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- LVB's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LVB has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Leisure Equipment & Products industry average. The net income increased by 16.8% when compared to the same quarter one year prior, going from $0.51 million to $0.59 million.
- STEINWAY MUSICAL INSTRS INC has improved earnings per share by 25.0% 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, STEINWAY MUSICAL INSTRS INC reported lower earnings of $0.12 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.12).
- After a year of stock price fluctuations, the net result is that LVB'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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
-- Written by a member of TheStreet RatingsStaff