Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- 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 193.0% when compared to the same quarter one year ago, falling from $3.84 million to -$3.57 million.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, DOUBLE EAGLE PETROLEUM CO's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for DOUBLE EAGLE PETROLEUM CO is rather low; currently it is at 20.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -60.50% is significantly below that of the industry average.
- Net operating cash flow has decreased to $5.64 million or 21.29% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, DOUBLE EAGLE PETROLEUM CO has marginally lower results.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.80%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 253.84% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Double Eagle Petroleum Co., an independent energy company, engages in the exploration, development, production, and sale of natural gas and crude oil primarily in the Rocky Mountain Basins of the western United States. The company has a P/E ratio of -9.3, below the S&P 500 P/E ratio of 17.7. Double Eagle has a market cap of $48.5 million and is part of the basic materials sector and energy industry. Shares are down 37.5% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff
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