NEW YORK ( TheStreet) -- Michael Baker Corporation (AMEX: BKR) 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 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 226.2% when compared to the same quarter one year prior, rising from $1.70 million to $5.53 million.
- BKR 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
- BAKER (MICHAEL) CORP 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, BAKER (MICHAEL) CORP reported lower earnings of $0.22 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $0.22).
- BKR, with its decline in revenue, underperformed when compared the industry average of 10.9%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for BAKER (MICHAEL) CORP is rather low; currently it is at 20.86%. Regardless of BKR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BKR's net profit margin of 3.84% compares favorably to the industry average.