Editor's Note: 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 NEW YORK ( TheStreet) -- Physicians Formula Holdings (Nasdaq: FACE) 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, expanding profit margins, good cash flow from operations, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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- The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 24.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for PHYSICIANS FORMULA HOLDINGS is rather high; currently it is at 55.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.30% is above that of the industry average.
- Net operating cash flow has significantly increased by 204.01% to $6.21 million when compared to the same quarter last year. In addition, PHYSICIANS FORMULA HOLDINGS has also vastly surpassed the industry average cash flow growth rate of -8.36%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Personal Products industry. The net income increased by 437.5% when compared to the same quarter one year prior, rising from $0.45 million to $2.42 million.
- FACE's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
-- Written by a member of TheStreet Ratings Staff