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) -- FLIR Systems (Nasdaq: FLIR) 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, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- FLIR's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.52, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, FLIR SYSTEMS INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for FLIR SYSTEMS INC is rather high; currently it is at 56.70%. Regardless of FLIR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FLIR's net profit margin of 16.82% significantly outperformed against the industry.
- Net operating cash flow has slightly increased to $46.44 million or 1.16% when compared to the same quarter last year. Despite an increase in cash flow, FLIR SYSTEMS INC's average is still marginally south of the industry average growth rate of 2.53%.
- FLIR SYSTEMS INC's earnings per share declined by 7.5% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FLIR SYSTEMS INC reported lower earnings of $1.39 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $1.39).
-- Written by a member of TheStreet Ratings Staff