Advanced Energy Industries Inc. Stock Upgraded (AEIS)

NEW YORK ( TheStreet) -- Advanced Energy Industries (Nasdaq: AEIS) 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, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • AEIS 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 3.11, which clearly demonstrates the ability to cover short-term cash needs.
  • AEIS, with its decline in revenue, underperformed when compared the industry average of 13.5%. Since the same quarter one year prior, revenues fell by 16.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 36.60% is the gross profit margin for ADVANCED ENERGY INDS INC which we consider to be strong. Regardless of AEIS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AEIS's net profit margin of 7.70% is significantly lower than the same period one year prior.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • ADVANCED ENERGY INDS INC's earnings per share declined by 29.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ADVANCED ENERGY INDS INC reported lower earnings of $0.84 versus $1.22 in the prior year. For the next year, the market is expecting a contraction of 20.8% in earnings ($0.67 versus $0.84).

Advanced Energy Industries, Inc., together with its subsidiaries, designs, manufactures, sells, and supports power conversion products that transform power into various usable forms. The company has a P/E ratio of 27.3, equal to the average electronics industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Advanced Energy has a market cap of $465.7 million and is part of the technology sector and electronics industry. Shares are up 10.4% year to date as of the close of trading on Tuesday.

You can view the full Advanced Energy 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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