Gencor Industries Inc. Stock Upgraded (GENC)

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) -- Gencor Industries (Nasdaq: GENC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 7.6% when compared to the same quarter one year prior, going from $2.77 million to $2.98 million.
  • GENC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 9.97, which clearly demonstrates the ability to cover short-term cash needs.
  • Despite the weak revenue results, GENC has outperformed against the industry average of 20.1%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • GENCOR INDUSTRIES INC has improved earnings per share by 6.9% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GENCOR INDUSTRIES INC increased its bottom line by earning $0.47 versus $0.03 in the prior year. For the next year, the market is expecting a contraction of 27.6% in earnings ($0.34 versus $0.47).
  • 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. Compared to other companies in the Machinery industry and the overall market, GENCOR INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
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Gencor Industries, Inc., together with its subsidiaries, designs, manufactures, and sells machinery products for the production of highway construction materials, synthetic fuels, and environmental control equipment. The company has a P/E ratio of 24.1, above the S&P 500 P/E ratio of 17.7. Gencor has a market cap of $57.8 million and is part of the industrial goods sector and industrial industry. Shares are down 4.4% year to date as of the close of trading on Monday.

You can view the full Gencor Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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.

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