NEW YORK ( TheStreet) -- Union Drilling (Nasdaq: UDRL) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for UNION DRILLING INC is currently lower than what is desirable, coming in at 31.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.50% is significantly below that of the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, UNION DRILLING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • UNION DRILLING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNION DRILLING INC reported poor results of -$0.69 versus -$0.54 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.69).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 45.5%. Since the same quarter one year prior, revenues rose by 43.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 89.2% when compared to the same quarter one year prior, rising from -$2.89 million to -$0.31 million.

Union Drilling, Inc. provides contract land drilling services and equipment primarily to independent natural gas producers in the United States. The company offers drilling rigs, as well as the drilling crews and ancillary equipment to operate its drilling rigs. Union has a market cap of $224.9 million and is part of the basic materials sector and energy industry. Shares are up 36.1% year to date as of the close of trading on Monday.

You can view the full Union Ratings Report or get investment ideas from our investment research center.
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