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) -- Rofin-Sinar Technologies Incorporated (Nasdaq: RSTI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- RSTI's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RSTI has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- 36.80% is the gross profit margin for ROFIN SINAR TECHNOLOGIES INC which we consider to be strong. Regardless of RSTI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RSTI's net profit margin of 6.82% compares favorably to the industry average.
- ROFIN SINAR TECHNOLOGIES INC's earnings per share declined by 41.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ROFIN SINAR TECHNOLOGIES INC reported lower earnings of $1.20 versus $2.06 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.20).
- RSTI, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 13.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of ROFIN SINAR TECHNOLOGIES INC has not done very well: it is down 11.12% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
-- Written by a member of TheStreet Ratings Staff