NEW YORK (TheStreet) -- Copano Energy (Nasdaq:CPNO) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity. Highlights from the ratings report include:
- CPNO's revenue growth has slightly outpaced the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 16.3%. 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.
- COPANO ENERGY LLC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, COPANO ENERGY LLC reported poor results of -$2.86 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$2.86).
- The share price of COPANO ENERGY LLC has not done very well: it is down 11.79% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for COPANO ENERGY LLC is currently extremely low, coming in at 8.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -43.80% is significantly below that of the industry average.
- Net operating cash flow has decreased to $22.11 million or 22.49% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff
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