NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally poor debt management.
Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- ENCORE ENERGY PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ENCORE ENERGY PARTNERS LP turned its bottom line around by earning $0.70 versus -$1.10 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $0.70).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENCORE ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $24.16 million or 31.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Encore Energy Partners LP, together with its subsidiaries, engages in the acquisition, exploitation, and development of oil and natural gas reserves from onshore fields in the United States. Encore Energy has a market cap of $905.7 million and is part of the
industry. Shares are down 12.8% year to date as of the close of trading on Monday.
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