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) -- Empresa Nacional de Electricidad (NYSE: EOC) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- ENDESA-EMPR NAC ELEC (CHILE) 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. During the past fiscal year, ENDESA-EMPR NAC ELEC (CHILE) increased its bottom line by earning $2.46 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income increased by 86.5% when compared to the same quarter one year prior, rising from $135.40 million to $252.58 million.
- The gross profit margin for ENDESA-EMPR NAC ELEC (CHILE) is rather high; currently it is at 54.77%. It has increased significantly from the same period last year. Along with this, the net profit margin of 26.33% significantly outperformed against the industry average.
- Net operating cash flow has increased to $504.70 million or 20.43% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.20%.
- The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EOC's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.