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) -- Flextronics International (Nasdaq: FLEX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, increase in stock price during the past year, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 15.9% when compared to the same quarter one year prior, going from $129.88 million to $150.55 million.
- Net operating cash flow has significantly increased by 60.49% to $482.25 million when compared to the same quarter last year. In addition, FLEXTRONICS INTERNATIONAL has also vastly surpassed the industry average cash flow growth rate of 1.32%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- FLEXTRONICS INTERNATIONAL has improved earnings per share by 33.3% 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, FLEXTRONICS INTERNATIONAL reported lower earnings of $0.71 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.71).
- FLEX, with its decline in revenue, underperformed when compared the industry average of 5.4%. Since the same quarter one year prior, revenues fell by 22.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
-- Written by a member of TheStreet Ratings Staff