AeroCentury Corporation Stock Upgraded (ACY)

NEW YORK ( TheStreet) -- AeroCentury Corporation (AMEX: ACY) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 22.4%. Since the same quarter one year prior, revenues rose by 42.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 158.1% when compared to the same quarter one year prior, rising from -$2.28 million to $1.33 million.
  • AEROCENTURY CORP reported significant earnings per share improvement 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, AEROCENTURY CORP swung to a loss, reporting -$0.95 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus -$0.95).
  • ACY is off 5.19% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Currently the debt-to-equity ratio of 1.72 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.

AeroCentury Corp. acquires and invests in used regional aircraft and aircraft engines for lease to foreign and domestic regional carriers in Europe, the United Kingdom, the Caribbean, North America, Central America, Africa, Asia, and South America. The company has a P/E ratio of 8.1, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. AeroCentury has a market cap of $17.4 million and is part of the services sector and diversified services industry. Shares are up 82.7% year to date as of the close of trading on Tuesday.

You can view the full AeroCentury Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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