NEW YORK ( TheStreet) -- Genesis Energy (NYSE: GEL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for GENESIS ENERGY -LP is currently extremely low, coming in at 6.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -12.40% is significantly below that of the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GENESIS ENERGY -LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • GEL's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
  • Net operating cash flow has significantly increased by 64.64% to $56.39 million when compared to the same quarter last year. In addition, GENESIS ENERGY -LP has also vastly surpassed the industry average cash flow growth rate of -1.06%.
  • The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 38.0%. 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.

Genesis Energy, L.P., together with its subsidiaries, operates in the midstream segment of the oil and gas industry in the Gulf Coast area of the United States. The company operates through four divisions: Pipeline Transportation, Refinery Services, Industrial Gases, and Supply and Logistics. The company has a P/E ratio of 54.5, above the average energy industry P/E ratio of 48.6 and above the S&P 500 P/E ratio of 17.2. Genesis Energy has a market cap of $1.1 billion and is part of the basic materials sector and energy industry. Shares are up 0.5% year to date as of the close of trading on Friday.

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