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) -- Calpine (NYSE: CPN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- CPN's very impressive revenue growth greatly exceeded the industry average of 8.4%. Since the same quarter one year prior, revenues leaped by 58.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 86.4% when compared to the same quarter one year prior, rising from -$125.00 million to -$17.00 million.
- Net operating cash flow has significantly increased by 178.34% to $123.00 million when compared to the same quarter last year. In addition, CALPINE CORP has also vastly surpassed the industry average cash flow growth rate of -14.02%.
- CALPINE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CALPINE CORP reported lower earnings of $0.03 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.03).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.