Vector Group Ltd. Stock Upgraded (VGR)

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) -- Vector Group (NYSE: VGR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Tobacco industry. The net income increased by 246.9% when compared to the same quarter one year prior, rising from $3.90 million to $13.51 million.
  • The gross profit margin for VECTOR GROUP LTD is rather high; currently it is at 52.25%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VGR's net profit margin of 9.89% significantly trails the industry average.
  • VGR, with its decline in revenue, slightly underperformed the industry average of 2.1%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • VECTOR GROUP LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, VECTOR GROUP LTD reported lower earnings of $0.30 versus $0.82 in the prior year.
  • In its most recent trading session, VGR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

a private equity investment firm making investments in management buyout and recapitalizations; $1.4B of acquisitions in 1998; investments typically $150-200M enterprise value, annouced final closing of BRS & Co. II, L.P. Vector Group has a market cap of $1.48 billion and is part of the consumer goods sector and tobacco industry. Shares are up 11.5% year to date as of the close of trading on Thursday.

You can view the full Vector Group Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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