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) -- Enersis (NYSE: ENI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 161.5% when compared to the same quarter one year prior, rising from $225.16 million to $588.72 million.
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
- 37.13% is the gross profit margin for ENERSIS SA which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.02% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to $1,175.56 million or 5.22% when compared to the same quarter last year. Despite an increase in cash flow, ENERSIS SA's cash flow growth rate is still lower than the industry average growth rate of 44.62%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, ENERSIS SA has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.