NEW YORK (TheStreet) -- Calpine (CPN) shares are up 4.3% to $18.25 in afternoon trading on Friday after the wholesale power generator reported its second quarter earnings results.

The company reported second quarter net income of $19 million, or 9 cents per diluted share on an adjusted basis, topping analysts' consensus estimates of earnings of 4 cents per share.

Revenue for the period fell to $1.422 billion from $1.939 billion, in line with analysts' $1.45 billion expectations for the period. 

For the year the company forecast adjusted EBITDA between $1.95 billion and $2.05 billion. 

"As the industry evolves, we are confident that the benefits of our strategically aligned fleet will continue to generate significant free cash flow for the foreseeable future," Thad Hill.

TheStreet Ratings team rates CALPINE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CALPINE CORP (CPN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Independent Power Producers & Energy Traders industry average. The net income increased by 41.2% when compared to the same quarter one year prior, rising from -$17.00 million to -$10.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, CALPINE CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • CPN, with its decline in revenue, slightly underperformed the industry average of 13.2%. Since the same quarter one year prior, revenues fell by 16.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The debt-to-equity ratio is very high at 3.72 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CPN has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$17.00 million or 113.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CPN Ratings Report