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) -- Capella Education Company (Nasdaq: CPLA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 93.25% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CPLA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- CAPELLA EDUCATION CO has improved earnings per share by 16.2% 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. During the past fiscal year, CAPELLA EDUCATION CO increased its bottom line by earning $2.80 versus $2.74 in the prior year. This year, the market expects an improvement in earnings ($2.93 versus $2.80).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income increased by 15.8% when compared to the same quarter one year prior, going from $8.65 million to $10.02 million.
- CPLA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.84, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for CAPELLA EDUCATION CO is rather high; currently it is at 62.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.45% is above that of the industry average.