Meritor Inc Stock Upgraded (MTOR)

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) -- Meritor (NYSE: MTOR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 19.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 152.4% when compared to the same quarter one year prior, rising from -$21.00 million to $11.00 million.
  • MERITOR 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, MERITOR INC swung to a loss, reporting -$0.21 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus -$0.21).
  • Powered by its strong earnings growth of 164.70% and other important driving factors, this stock has surged by 97.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The gross profit margin for MERITOR INC is currently extremely low, coming in at 13.12%. Regardless of MTOR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.21% trails the industry average.

Meritor, Inc. designs, develops, manufactures, sells, markets, distributes, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. The company has a P/E ratio of 351.7, above the S&P 500 P/E ratio of 17.7. Meritor has a market cap of $1.03 billion and is part of the consumer goods sector and automotive industry. Shares are up 1.1% year to date as of the close of trading on Friday.

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

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