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) -- Aerovironment Incorporated (Nasdaq: AVAV) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures, 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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- AEROVIRONMENT INC has improved earnings per share by 30.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AEROVIRONMENT INC increased its bottom line by earning $1.37 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.46 versus $1.37).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 32.6% when compared to the same quarter one year prior, rising from $6.59 million to $8.74 million.
- AVAV has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.98, which clearly demonstrates the ability to cover short-term cash needs.
- 48.10% is the gross profit margin for AEROVIRONMENT INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.88% is above that of the industry average.
- Net operating cash flow has significantly increased by 171.29% to $22.56 million when compared to the same quarter last year. In addition, AEROVIRONMENT INC has also vastly surpassed the industry average cash flow growth rate of -11.72%.
-- Written by a member of TheStreet Ratings Staff