This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

TSC Ratings' Updates: Panhandle Oil & Gas

Net income increased by 41.9% since the year-ago quarter, rising from $300,000 to $430,000. Revenue fell by 7% but still outperformed the industry average, and EPS increased. GSE Systems has no debt to speak of, and it maintains a quick ratio of 2.5, demonstrating its ability to cover short-term cash needs. The gross profit margin of 28.3% is lower than desirable, having decreased from the same quarter the previous year, and the net profit margin of 6.1% significantly trails the industry average.

We've upgraded Panhandle Oil & Gas (PHX), which engages in the acquisition, management and development of oil and gas properties, from hold to buy. This rating is driven by the company's robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue leaped by 118.3% since the year-ago quarter, greatly outperforming the industry average of 14.2% growth. Net operating cash flow increased to $14.5 million, or by 37.2% compared with the year-ago quarter, and ROE also increased greatly. Panhandle's debt-to-equity ratio of 0.14 is very low and currently below the industry average, implying very successful management of debt levels. The company also maintains a quick ratio of 1.1, which illustrates its ability to avoid short-term cash problems. Its gross profit margin of 88.9% is very high, having increased since the year-ago quarter, and its 36.8% net profit margin significantly outperformed the industry average.

We've downgraded Ixia (XXIA), which provides test systems for IP-based infrastructure and services, from hold to sell. This rating is driven by the company's deteriorating net income, disappointing return on equity, decline in the stock price during the past year and feeble growth in its earnings per share.

Net income decreased from $4.4 million in the year-ago quarter to -$18.3 million in the most recent quarter, significantly underperforming the S&P 500 and the communications equipment industry. ROE also decreased, a clear sign of weakness within the company, and EPS experienced a steep decline. The company has reported a trend of declining earnings per share over the past two years, but the consensus estimate suggests that this trend should reverse in the coming year. Ixia's gross profit margin of 75.2% is currently very high, though it has decreased significantly from the same period last year. Its net profit margin of -44.60% significantly underperformed when compared to the industry average.

Shares are down 12% year over year, in part reflecting the market's overall decline (which was actually deeper), but this should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

All ratings changes generated on Feb. 9 are listed below.

Ticker
Company
Current
Change
Previous
BFRM
BioForm Medical
SELL
Initiated
ENTR
Entropic Communications
SELL
Initiated
GVP
GSE Systems
HOLD
Upgrade
SELL
PHX
Panhandle Oil & Gas
BUY
Upgrade
HOLD
TNDM
Neutral Tandem
HOLD
Initiated
XXIA
IXIA
SELL
Downgrade
HOLD

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs