NEW YORK ( TheStreet) -- Ferrellgas Partners (NYSE: FGP) 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 and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$0.25 million or 100.40% 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.
  • The gross profit margin for FERRELLGAS PARTNERS -LP is rather low; currently it is at 15.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.60% trails that of the industry average.
  • FERRELLGAS PARTNERS -LP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FERRELLGAS PARTNERS -LP reported lower earnings of $0.29 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.29).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • FGP's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 8.1%. 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.

Ferrellgas Partners, L.P. engages in the distribution and sale of propane and related equipment primarily in the United States. The company has a P/E ratio of 50.2, below the average energy industry P/E ratio of 75.3 and above the S&P 500 P/E ratio of 17.2. Ferrellgas has a market cap of $1.9 billion and is part of the basic materials sector and energy industry. Shares are up 4.8% year to date as of the close of trading on Friday.

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