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) -- PCTEL (Nasdaq: PCTI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, increase in stock price during the past year, growth in earnings per share 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 greatly exceeded the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 46.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 346.0% when compared to the same quarter one year prior, rising from -$0.76 million to $1.87 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- PCTEL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PCTEL INC swung to a loss, reporting -$0.53 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.53).
- 35.90% is the gross profit margin for PCTEL INC which we consider to be strong. Regardless of PCTI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PCTI's net profit margin of 7.43% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff