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) -- UBS (NYSE: UBS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and increase in stock price during the past year. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- UBS AG 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UBS AG turned its bottom line around by earning $0.93 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.93).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 160.6% when compared to the same quarter one year prior, rising from -$1,764.04 million to $1,068.25 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, UBS AG has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.4%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for UBS AG is currently lower than what is desirable, coming in at 27.65%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.67% trails the industry average.