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) -- 7 Days Group Holdings (NYSE: SVN) has been upgraded by TheStreet Ratings from sell to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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 greatly exceeded the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 28.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- seven DAYS GROUP HLDGS LTD -ADR has improved earnings per share by 40.0% 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. We feel that this trend should continue. During the past fiscal year, seven DAYS GROUP HLDGS LTD -ADR increased its bottom line by earning $0.42 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($3.65 versus $0.42).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 45.8% when compared to the same quarter one year prior, rising from $6.94 million to $10.12 million.
- 36.10% is the gross profit margin for seven DAYS GROUP HLDGS LTD -ADR which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.30% trails the industry average.
- SVN's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.48 is very weak and demonstrates a lack of ability to pay short-term obligations.
-- Written by a member of TheStreet Ratings Staff