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) -- Mac-Gray Corporation (NYSE: TUC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income 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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- MAC-GRAY CORP reported significant earnings per share improvement 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, MAC-GRAY CORP increased its bottom line by earning $0.29 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.56 versus $0.29).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 2403.9% when compared to the same quarter one year prior, rising from $0.10 million to $2.55 million.
- Despite the weak revenue results, TUC has outperformed against the industry average of 14.5%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, MAC-GRAY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for MAC-GRAY CORP is currently lower than what is desirable, coming in at 29.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.10% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff