NEW YORK ( TheStreet) -- GAIN Capital Holdings (NYSE: GCAP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, increase in stock price during the past year and growth in earnings per share. 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 4.2%. Since the same quarter one year prior, revenues rose by 49.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GCAP's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 443.1% when compared to the same quarter one year prior, rising from -$1.25 million to $4.28 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- GAIN CAPITAL HOLDINGS 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, GAIN CAPITAL HOLDINGS INC reported lower earnings of $0.04 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($0.44 versus $0.04).