TSC Ratings' Updates: Tesoro

Earnings per share are down 1,000% in the most recent quarter compared with the same quarter last year. The company has reported a trend of declining earnings per share over the past year, but the consensus estimate suggests that this trend should reverse in the coming year. Shares plunged 30.6% over the past year, with the silver lining that the broader market's performance was even worse. In one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry, but due to other concerns, we feel the stock is still not a good buy right now.

We've upgraded FPL Group(FPL Quote), which engages in the generation, transmission, distribution, and sale of electric energy, from hold to buy, driven by its revenue growth, growth in earnings per share, increase in net income and relatively strong performance when compared with the S&P 500 during the past year. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

Revenue rose by 17.7% since the same quarter last year, outperforming the industry average of 6.5% growth and helping boost EPS, which are up 44.4%. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue. During the past fiscal year, it increased its bottom line by earning $3.28 vs. $3.23 in the prior year. This year, the market expects an improvement in earnings to $3.85. Net income is up 45.2% compared with the year-ago quarter, outperforming the S&P 500 and the electric utilities industry. FPL's gross profit margin of 30.9% is currently lower than what is desirable, but it has managed to increase from the same period last year. Its net profit margin of 14.40% compares favorably with the industry average.