"We rate TAYLOR DEVICES INC (TAYD) 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, good cash flow from operations, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 23.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
TAYD 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 95.0% when compared to the same quarter one year prior, rising from $0.20 million to $0.39 million.
Net operating cash flow has significantly increased by 157.66% to $0.82 million when compared to the same quarter last year. In addition, TAYLOR DEVICES INC has also vastly surpassed the industry average cash flow growth rate of -16.91%.
Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.