Schmitt Industries Inc Stock Upgraded (SMIT)

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) -- Schmitt Industries (Nasdaq: SMIT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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Highlights from the ratings report include:
  • SMIT's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SMIT 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 3.51, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SCHMITT INDUSTRIES INC/OR is rather high; currently it is at 50.15%. Regardless of SMIT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.34% trails the industry average.
  • In its most recent trading session, SMIT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, SCHMITT INDUSTRIES INC/OR's return on equity significantly trails that of both the industry average and the S&P 500.

Schmitt Industries, Inc. designs, manufactures, and sells computer-controlled vibration detection, and balancing and process control systems primarily to the machine tool industry in North America, Europe, and Asia. It operates in two segments, Balancer and Measurement. Schmitt has a market cap of $8.7 million and is part of the technology sector and electronics industry. Shares are up 13.3% year to date as of the close of trading on Wednesday.

You can view the full Schmitt Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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