NEW YORK ( TheStreet) -- Hologic (Nasdaq: HOLX) 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, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that HOLX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.23 is high and demonstrates strong liquidity.
- HOLOGIC INC's earnings per share declined by 35.7% 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, HOLOGIC INC turned its bottom line around by earning $0.59 versus -$0.25 in the prior year. This year, the market expects an improvement in earnings ($1.37 versus $0.59).
- The gross profit margin for HOLOGIC INC is rather high; currently it is at 65.40%. Regardless of HOLX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HOLX's net profit margin of 5.00% is significantly lower than the same period one year prior.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, HOLOGIC INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff