NEW YORK ( TheStreet) -- Anaren (Nasdaq: ANEN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- ANEN 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 5.20, which clearly demonstrates the ability to cover short-term cash needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 39.70% is the gross profit margin for ANAREN INC which we consider to be strong. Regardless of ANEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ANEN's net profit margin of 5.80% is significantly lower than the same period one year prior.
- The revenue fell significantly faster than the industry average of 20.3%. Since the same quarter one year prior, revenues fell by 21.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- ANAREN INC's earnings per share declined by 39.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ANAREN INC increased its bottom line by earning $1.12 versus $0.94 in the prior year. For the next year, the market is expecting a contraction of 31.3% in earnings ($0.77 versus $1.12).
-- Written by a member of TheStreet Ratings Staff