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) -- Kaydon Corporation (NYSE: KDN) 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, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 2.2%. 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.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 92.37% to $37.73 million when compared to the same quarter last year. In addition, KAYDON CORP has also vastly surpassed the industry average cash flow growth rate of 16.41%.
- Compared to where it was trading one year ago, KDN is down 30.00% to its most recent closing price of 24.85. Looking ahead, our view is that this company's fundamentals give it good potential for further appreciation.
- 40.40% is the gross profit margin for KAYDON CORP which we consider to be strong. Regardless of KDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KDN's net profit margin of 7.27% compares favorably to the industry average.
-- Written by a member of TheStreet Ratings Staff