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"We rate ELECTRO-SENSORS INC (ELSE) a BUY. This is driven by multiple strengths, 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, attractive valuation levels, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ELSE's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 8.74, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ELECTRO-SENSORS INC is rather high; currently it is at 62.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.32% is above that of the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 201.0% when compared to the same quarter one year prior, rising from $0.10 million to $0.31 million.
- You can view the full analysis from the report here: ELSE Ratings Report
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