NEW YORK (TheStreet) -- Star Gas Partners L.P (NYSE:SGU) has been downgraded by TheStreet Ratings from buy to hold. 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 and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- SGU's revenue growth trails the industry average of 26.5%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Gas Utilities industry and the overall market on the basis of return on equity, STAR GAS PARTNERS -LP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for STAR GAS PARTNERS -LP is rather low; currently it is at 20.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.60% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff
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