Arkansas Best Corporation Stock Upgraded (ABFS)

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) -- Arkansas Best Corporation (Nasdaq: ABFS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. 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:
  • ABFS's revenue growth has slightly outpaced the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ABFS's debt-to-equity ratio is very low at 0.24 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 1.14, which illustrates the ability to avoid short-term cash problems.
  • ARKANSAS BEST CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ARKANSAS BEST CORP turned its bottom line around by earning $0.56 versus -$0.34 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $0.56).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 230.5% when compared to the same quarter one year prior, rising from -$7.93 million to $10.35 million.
  • Powered by its strong earnings growth of 222.58% and other important driving factors, this stock has surged by 208.40% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.

Arkansas Best Corporation, through its subsidiaries, provides freight transportation services and solutions. The company has a P/E ratio of 56.6, above the S&P 500 P/E ratio of 17.7. Arkansas Best has a market cap of $859.4 million and is part of the services sector and transportation industry. Shares are down 0.8% year to date as of the close of trading on Monday.

You can view the full Arkansas Best 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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