Steinway Musical Instruments Inc. Stock Upgraded (LVB)

NEW YORK ( TheStreet) -- Steinway Musical Instruments (NYSE: LVB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Leisure Equipment & Products industry. The net income increased by 328.9% when compared to the same quarter one year prior, rising from -$1.05 million to $2.40 million.
  • The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LVB has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
  • STEINWAY MUSICAL INSTRS INC 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, STEINWAY MUSICAL INSTRS INC reported lower earnings of $0.12 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $0.12).
  • LVB, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Leisure Equipment & Products industry and the overall market, STEINWAY MUSICAL INSTRS INC's return on equity significantly trails that of both the industry average and the S&P 500.

Steinway Musical Instruments, Inc., through its subsidiaries, engages in the design, manufacture, marketing, and distribution of musical instruments. The company operates in two segments, Pianos, and Band and Orchestral Instruments. The company has a P/E ratio of 162.7, below the average consumer durables industry P/E ratio of 175.2 and above the S&P 500 P/E ratio of 17.7. Steinway Musical Instruments has a market cap of $281.8 million and is part of the consumer goods sector and consumer durables industry. Shares are down 6.7% year to date as of the close of trading on Monday.

You can view the full Steinway Musical Instruments 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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