NEW YORK ( TheStreet) -- Stantec (NYSE: STN) 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, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly increased by 85.77% to -$1.88 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 44.78%.
- The gross profit margin for STANTEC INC is rather high; currently it is at 54.40%. Regardless of STN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STN's net profit margin of 6.70% compares favorably to the industry average.
- Despite currently having a low debt-to-equity ratio of 0.45, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.18 is sturdy.
- STANTEC INC has improved earnings per share by 5.8% 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, STANTEC INC reported lower earnings of $0.26 versus $2.04 in the prior year.
-- Written by a member of TheStreet RatingsStaff