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) -- Rio Alto Mining (NYSE: RIOM) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- In comparison to the other companies in the Metals & Mining industry and the overall market, RIO ALTO MINING LTD's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 27.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- RIOM's debt-to-equity ratio is very low at 0.01 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 1.20, which illustrates the ability to avoid short-term cash problems.
- 47.13% is the gross profit margin for RIO ALTO MINING LTD which we consider to be strong. Regardless of RIOM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RIOM's net profit margin of 20.48% compares favorably to the industry average.
- RIOM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 56.23%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.