POSCO Stock Upgraded (PKX)

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) -- POSCO (NYSE: PKX) 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, attractive valuation levels, increase in stock price during the past year, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 29.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • POSCO 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, POSCO reported lower earnings of $4.12 versus $7.49 in the prior year. This year, the market expects an improvement in earnings ($5.34 versus $4.12).
  • PKX's debt-to-equity ratio of 0.65 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.

POSCO, together with its subsidiaries, manufactures and sells steel rolled products and plates. It operates through four segments: Steel, Trading, Construction, and Others. POSCO has a market cap of $25.26 billion and is part of the basic materials sector and metals & mining industry. Shares are up 2.6% year to date as of the close of trading on Thursday.

You can view the full POSCO 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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