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"We rate ITERIS INC (ITI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ITI's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- ITI 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 2.54, which clearly demonstrates the ability to cover short-term cash needs.
- 36.20% is the gross profit margin for ITERIS INC which we consider to be strong. Regardless of ITI'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 0.28% trails the industry average.
- ITERIS INC has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. Despite the past stability of earnings, the consensus estimate anticipates a weakening in earnings. During the past fiscal year, ITERIS INC increased its bottom line by earning $0.04 versus $0.03 in the prior year. This year, the market expects earnings to be in line with last year ($0.04 versus $0.04).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ITERIS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ITI Ratings Report