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) -- NTT DoCoMo (NYSE: DCM) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
- The revenue growth greatly exceeded the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 32.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- DCM's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DCM has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
- NTT DOCOMO INC's earnings per share declined by 9.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NTT DOCOMO INC reported lower earnings of $1.09 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $1.09).
- The gross profit margin for NTT DOCOMO INC is rather high; currently it is at 56.86%. Regardless of DCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DCM's net profit margin of 3.74% is significantly lower than the industry average.
- 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.