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) -- St Jude Medical (NYSE: STJ) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The gross profit margin for ST JUDE MEDICAL INC is currently very high, coming in at 72.90%. Regardless of STJ'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 8.74% trails the industry average.
- ST JUDE MEDICAL INC reported flat earnings per share in the most recent quarter. 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, ST JUDE MEDICAL INC reported lower earnings of $2.40 versus $2.51 in the prior year. This year, the market expects an improvement in earnings ($3.71 versus $2.40).
- STJ, with its decline in revenue, underperformed when compared the industry average of 8.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- STJ's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.43 is sturdy.
-- Written by a member of TheStreet Ratings Staff