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) -- United States Cellular Corporation (NYSE: USM) 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- USM's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, USM has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for US CELLULAR CORP is rather high; currently it is at 56.40%. Regardless of USM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, USM's net profit margin of 3.10% is significantly lower than the industry average.
- US CELLULAR CORP's earnings per share declined by 42.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, US CELLULAR CORP increased its bottom line by earning $2.06 versus $1.56 in the prior year. For the next year, the market is expecting a contraction of 12.9% in earnings ($1.80 versus $2.06).
- The change in net income from the same quarter one year ago has exceeded that of the Wireless Telecommunication Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 42.9% when compared to the same quarter one year ago, falling from $62.14 million to $35.45 million.
-- Written by a member of TheStreet Ratings Staff