NEW YORK (
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and generally poor debt management.
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Highlights from the ratings report include:
- PNG's very impressive revenue growth greatly exceeded the industry average of 11.9%. Since the same quarter one year prior, revenues leaped by 115.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PAA NATURAL GAS STORAGE 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, PAA NATURAL GAS STORAGE LP increased its bottom line by earning $0.83 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.01 versus $0.83).
- The gross profit margin for PAA NATURAL GAS STORAGE LP is rather low; currently it is at 24.60%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 14.70% is above that of the industry average.
- PNG has underperformed the S&P 500 Index, declining 21.55% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
PAA Natural Gas Storage, L.P. engages in the development, acquisition, operation, and commercial management of natural gas storage facilities. As of December 31, 2011, it owned and operated three natural gas storage facilities located in Louisiana, Mississippi and Michigan. The company has a P/E ratio of 18.2, below the average utilities industry P/E ratio of 18.4 and above the S&P 500 P/E ratio of 17.7. PAA Natural Gas Storage L.P has a market cap of $1.05 billion and is part of the
industry. Shares are down 6.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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.