TravelCenters Of America LLC Stock Upgraded (TA)

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) -- TravelCenters of America (NYSE: TA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 587.0% when compared to the same quarter one year prior, rising from -$2.46 million to $11.98 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TA's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • TRAVELCENTERS OF AMERICA LLC 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TRAVELCENTERS OF AMERICA LLC reported lower earnings of $1.06 versus $1.13 in the prior year. For the next year, the market is expecting a contraction of 22.6% in earnings ($0.82 versus $1.06).

TravelCenters of America LLC operates and franchises travel centers primarily along the United States interstate highway system. TravelCenters of America has a market cap of $311.2 million and is part of the services sector and specialty retail industry. Shares are down 12.3% year to date as of the close of trading on Friday.

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

3x UPSIDE POTENTIAL: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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

More from Markets

P&G, GE and IBM Need to Innovate; Has Starbucks' Stock Grown Ice Cold?--ICYMI

P&G, GE and IBM Need to Innovate; Has Starbucks' Stock Grown Ice Cold?--ICYMI

Is Best Buy Sleeping With the Enemy With Amazon Partnership?

Is Best Buy Sleeping With the Enemy With Amazon Partnership?

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Video: The S&P 500 Is Failing to Make New Highs

Video: The S&P 500 Is Failing to Make New Highs

Dow, S&P 500 and Nasdaq Finish Lower as Apple, P&G Slump

Dow, S&P 500 and Nasdaq Finish Lower as Apple, P&G Slump