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 buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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Highlights from the ratings report include:
- EPM's very impressive revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues leaped by 140.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EPM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 9.19, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 300.00% and other important driving factors, this stock has surged by 36.71% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EVOLUTION PETROLEUM CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Evolution Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploitation, and development of properties for the production of crude oil and natural gas in the United States. The company has a P/E ratio of 66.1, above the average energy industry P/E ratio of 64.1 and above the S&P 500 P/E ratio of 17.7. Evolution has a market cap of $231.7 million and is part of the
industry. Shares are up 6.7% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff