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) -- Gruma S.A.B. de C.V (NYSE: GMK) 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, increase in net income, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- GMK's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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 Food Products industry. The net income increased by 117.8% when compared to the same quarter one year prior, rising from $14.83 million to $32.30 million.
- Net operating cash flow has increased to $53.98 million or 39.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.97%.
- Powered by its strong earnings growth of 120.00% and other important driving factors, this stock has surged by 53.45% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- GRUMA SAB DE CV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GRUMA SAB DE CV increased its bottom line by earning $2.68 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 74.6% in earnings ($0.68 versus $2.68).
-- Written by a member of TheStreet Ratings Staff