NEW YORK (TheStreet) -- Gencor Industries (Nasdaq:GENC) 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, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
■The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 7.6% when compared to the same quarter one year prior, going from $2.77 million to $2.98 million.
■GENC 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 9.97, which clearly demonstrates the ability to cover short-term cash needs.
■Despite the weak revenue results, GENC has outperformed against the industry average of 20.1%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
■GENCOR INDUSTRIES INC has improved earnings per share by 6.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GENCOR INDUSTRIES INC increased its bottom line by earning $0.47 versus $0.03 in the prior year. For the next year, the market is expecting a contraction of 27.6% in earni
I looked at the 5 year stock performance of the companies in the highway industry. Astec has gone from 35 to 35. Granite 35 to 30. Terex 62 to 33. Sterling 20 to 10.
The industry is in a funk. The only good thing is that these companies have very strong balance sheets. I'm holding Gencor and some of these companies noting that highway construction has to pick up eventually. The fortress balance sheet protects on the downside.