Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK (TheStreet) -- Northwest Natural Gas (NYSE:NWN) 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, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.
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- NWN's revenue growth has slightly outpaced the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 23.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 50.9% when compared to the same quarter one year prior, rising from $1.41 million to $2.13 million.
- NORTHWEST NATURAL GAS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORTHWEST NATURAL GAS CO reported lower earnings of $2.21 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($2.25 versus $2.21).
- The gross profit margin for NORTHWEST NATURAL GAS CO is rather low; currently it is at 24.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.61% trails that of the industry average.
- Net operating cash flow has decreased to $54.02 million or 11.90% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, NORTHWEST NATURAL GAS CO has marginally lower results.
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