Rating Change #9
Vanguard Natural Resources LLC (VNR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- VNR's very impressive revenue growth greatly exceeded the industry average of 22.9%. Since the same quarter one year prior, revenues leaped by 62.9%. 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.
- VNR's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.11 is sturdy.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, VANGUARD NATURAL RESOURCES's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The share price of VANGUARD NATURAL RESOURCES has not done very well: it is down 10.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year 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.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 169.9% when compared to the same quarter one year ago, falling from -$5.64 million to -$15.21 million.
Vanguard Natural Resources, LLC, through its subsidiaries, engages in the acquisition and development of oil and natural gas properties in the United States. The company has a P/E ratio of 12.5, below the average energy industry P/E ratio of 12.6 and below the S&P 500 P/E ratio of 17.7. Vanguard Natural has a market cap of $826.8 million and is part of the basic materials sector and energy industry. Shares are up 0.6% year to date as of the close of trading on Friday.You can view the full Vanguard Natural Ratings Report or get investment ideas from our investment research center.