NEW YORK (TheStreet) -- Heska Corporation (Nasdaq:HSKA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance 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 ratings report include:
46.50% is the gross profit margin for HESKA CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HSKA's net profit margin of 3.00% significantly trails the industry average.
Compared to its closing price of one year ago, HSKA's share price has jumped by 50.96%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
HESKA CORP's earnings per share declined by 35.3% 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, HESKA CORP turned its bottom line around by earning $0.40 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus $0.40).
Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.3%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
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 Pharmaceuticals industry and the overall market, HESKA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
