We've upgraded Plains All American Pipeline (PAA), which engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquefied petroleum gas and other natural gas-related petroleum products, from hold to buy, driven by its robust revenue growth, compelling growth in net income, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.
Revenue is up an impressive 52.8% since the same quarter a year ago, and net income is up 109.3%, from $98.4 million to $206 million. ROE has improved slightly, and EPS are up significantly. We feel the company is poised for EPS growth in the coming year. Plains All American's gross profit margin of 3.8% is extremely low, though it has increased from the same period last year, and its net profit margin of 2.3% trails the industry average.
We've downgraded UCBH Holdings (UCBH), which operates as the bank holding company for United Commercial Bank, from hold to sell, driven by its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Net income decreased significantly compared with the same quarter a year ago, falling from $16.2 million to -$53.72 million. ROE also greatly decreased, a signal of major weakness. Revenue fell by 10.8%. EPS experienced a steep decline of 440% in the most recent quarter compared with the year-ago quarter. The company has reported a trend of declining EPS over the past two years, but the consensus estimate suggest that it should reverse in the coming year.Shares are down 82.7% on the year, underperforming the S&P 500. Naturally, the overall market trend is bound to be a significant factor, and 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. Other ratings changes include First Busey (BUSE), downgraded from buy to hold, and EHealth (EHTH), upgraded from sell to hold. All ratings changes generated on Jan. 23 are listed below.
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