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) -- Twin Disc (Nasdaq: TWIN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- Compared to its closing price of one year ago, TWIN's share price has jumped by 40.81%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TWIN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- TWIN's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- TWIN, with its decline in revenue, slightly underperformed the industry average of 17.8%. Since the same quarter one year prior, revenues fell by 21.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TWIN DISC 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, TWIN DISC INC reported lower earnings of $0.33 versus $2.30 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.33).