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) -- Recon Technology (Nasdaq: RCON) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- RCON's very impressive revenue growth greatly exceeded the industry average of 7.8%. Since the same quarter one year prior, revenues leaped by 50.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RCON's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RCON has a quick ratio of 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
- RECON TECHNOLOGY LTD 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 year. During the past fiscal year, RECON TECHNOLOGY LTD continued to lose money by earning -$0.15 versus -$1.14 in the prior year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, RECON TECHNOLOGY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RECON TECHNOLOGY LTD is currently lower than what is desirable, coming in at 31.00%. Regardless of RCON's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.44% trails the industry average.
-- Written by a member of TheStreet Ratings Staff