Will This Upgrade Help UIL Holdings (UIL) Today?

Story updated at 9:45 a.m.to reflect market activity.

NEW YORK (TheStreet) -- Bank of America-Merrill Lynch upgraded UIL Holdings (UIL) to "buy" from "neutral" Monday.

Shares of UIL gained 1.5% to $35.37 in morning trading.

Share could reach as high as $38 according to the bank. The upgrade it due to UIL shares trading well below their fundamental value according to Bank of America-Merrill Lynch analysts.

Must Read: Warren Buffett's 10 Favorite Dividend Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates UIL HOLDINGS CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate UIL HOLDINGS CORP (UIL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UIL HOLDINGS CORP has improved earnings per share by 28.6% 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, UIL HOLDINGS CORP increased its bottom line by earning $2.18 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($2.28 versus $2.18).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electric Utilities industry average, but is greater than that of the S&P 500. The net income increased by 40.1% when compared to the same quarter one year prior, rising from $28.84 million to $40.42 million.
  • The gross profit margin for UIL HOLDINGS CORP is currently lower than what is desirable, coming in at 27.96%. Regardless of UIL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UIL's net profit margin of 9.28% compares favorably to the industry average.
  • UIL has underperformed the S&P 500 Index, declining 12.49% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: UIL Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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.

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