Rating Change #4
El Paso Corporation (EP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.
Highlights from the ratings report include:
- EL PASO CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EL PASO CORP turned its bottom line around by earning $1.00 versus -$0.86 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $1.00).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 66.9% when compared to the same quarter one year prior, rising from $157.00 million to $262.00 million.
- EP's revenue growth trails the industry average of 38.1%. Since the same quarter one year prior, revenues rose by 21.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for EL PASO CORP is rather high; currently it is at 64.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.20% significantly outperformed against the industry average.
- Net operating cash flow has increased to $465.00 million or 11.77% when compared to the same quarter last year. Despite an increase in cash flow, EL PASO CORP's cash flow growth rate is still lower than the industry average growth rate of 39.22%.
El Paso Corporation operates in the natural gas transmission, and exploration and production sectors of the energy industry primarily in the United States. The company has a P/E ratio of 35.7, above the average energy industry P/E ratio of 35.2 and above the S&P 500 P/E ratio of 17.7. El Paso has a market cap of $19.2 billion and is part of the basic materials sector and energy industry. Shares are up 81.6% year to date as of the close of trading on Tuesday.You can view the full El Paso Ratings Report or get investment ideas from our investment research center.