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) -- Tim Holding Company (NYSE: TSU) 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, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 46.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TSU's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 34.1% when compared to the same quarter one year prior, rising from $114.81 million to $153.98 million.
- The gross profit margin for TIM PARTICIPACOES SA is rather high; currently it is at 56.70%. Regardless of TSU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.71% trails the industry average.
- Net operating cash flow has remained constant at $719.54 million with no significant change when compared to the same quarter last year. This quarter, TIM PARTICIPACOES SA's cash flow growth rate has remained relatively unchanged and is slightly below the industry average.
-- Written by a member of TheStreet Ratings Staff