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) -- Polypore International (NYSE: PPO) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- 43.10% is the gross profit margin for POLYPORE INTERNATIONAL INC which we consider to be strong. Regardless of PPO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PPO's net profit margin of 9.71% compares favorably to the industry average.
- POLYPORE INTERNATIONAL INC's earnings per share declined by 33.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, POLYPORE INTERNATIONAL INC reported lower earnings of $1.50 versus $2.24 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.50).
- PPO, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 5.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.19 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, PPO's quick ratio is somewhat strong at 1.40, demonstrating the ability to handle short-term liquidity needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Electrical Equipment industry and the overall market, POLYPORE INTERNATIONAL INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff