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 revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.
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Highlights from the ratings report include:
- TGE's revenue growth trails the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 0.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- TGE's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
- After a year of stock price fluctuations, the net result is that TGE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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 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 Energy Equipment & Services industry. The net income has significantly decreased by 436.3% when compared to the same quarter one year ago, falling from $0.59 million to -$1.97 million.
- The gross profit margin for TGC INDUSTRIES INC is rather low; currently it is at 17.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.50% is significantly below that of the industry average.
TGC Industries, Inc. provides geophysical services for clients in the oil and gas business in the United States and Canada. The company has a P/E ratio of 10.6, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. TGC has a market cap of $172.6 million and is part of the
industry. Shares are up 3.1% year to date as of the close of trading on Tuesday.
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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.