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) -- Twin Disc (Nasdaq: TWIN) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Net operating cash flow has significantly increased by 638.75% to $10.01 million when compared to the same quarter last year. In addition, TWIN DISC INC has also vastly surpassed the industry average cash flow growth rate of 17.67%.
- TWIN's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- TWIN, with its decline in revenue, slightly underperformed the industry average of 12.5%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TWIN DISC INC's earnings per share declined by 42.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TWIN DISC INC increased its bottom line by earning $2.25 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 64.4% in earnings ($0.80 versus $2.25).
-- Written by a member of TheStreet Ratings Staff