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) -- Thermon Group Holdings (NYSE: THR) 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 sub par growth in net income.
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- The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, THR has a quick ratio of 2.06, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 285.06% to $6.16 million when compared to the same quarter last year. In addition, THERMON GROUP HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 13.87%.
- THERMON GROUP HOLDINGS 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. 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, THERMON GROUP HOLDINGS INC increased its bottom line by earning $0.85 versus $0.37 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $0.85).
- THR, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 48.41% is the gross profit margin for THERMON GROUP HOLDINGS INC which we consider to be strong. Regardless of THR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, THR's net profit margin of -10.57% significantly underperformed when compared to the industry average.