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 notable return on equity, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, unimpressive growth in net income and generally poor debt management.
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Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Gas Utilities industry and the overall market, QUESTAR CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- The gross profit margin for QUESTAR CORP is currently very high, coming in at 78.30%. It has increased significantly from the same period last year. Along with this, the net profit margin of 20.80% significantly outperformed against the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The change in net income from the same quarter one year ago has exceeded that of the Gas Utilities industry average, but is less than that of the S&P 500. The net income has decreased by 2.7% when compared to the same quarter one year ago, dropping from $40.30 million to $39.20 million.
- Net operating cash flow has decreased to $84.30 million or 40.04% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
Questar Corporation operates as an integrated natural gas company in the United States. The company has a P/E ratio of 17.2, below the average energy industry P/E ratio of 17.4 and below the S&P 500 P/E ratio of 17.7. Questar has a market cap of $3.65 billion and is part of the
industry. Shares are up 2.7% 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.