Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Lexmark International (NYSE: LXK) 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, good cash flow from operations, expanding profit margins, solid stock price performance 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 Computers & Peripherals industry. The net income increased by 126.8% when compared to the same quarter one year prior, rising from $39.20 million to $88.90 million.
- Net operating cash flow has significantly increased by 81.05% to $88.90 million when compared to the same quarter last year. In addition, LEXMARK INTL INC has also vastly surpassed the industry average cash flow growth rate of -24.17%.
- 46.03% is the gross profit margin for LEXMARK INTL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.98% trails the industry average.
- Powered by its strong earnings growth of 152.72% and other important driving factors, this stock has surged by 93.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
- LEXMARK INTL 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, LEXMARK INTL INC reported lower earnings of $1.49 versus $4.11 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $1.49).