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) -- Royal Gold (Nasdaq: RGLD) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
- RGLD's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 20.79, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $40.12 million or 2.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -28.41%.
- The gross profit margin for ROYAL GOLD INC is currently very high, coming in at 96.66%. Regardless of RGLD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RGLD's net profit margin of 18.67% compares favorably to the industry average.
- ROYAL GOLD INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ROYAL GOLD INC reported lower earnings of $1.09 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $1.09).
- RGLD, with its decline in revenue, underperformed when compared the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.