NEW YORK ( TheStreet) -- Western Refining (NYSE: WNR) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins. Highlights from the ratings report include:
- Currently the debt-to-equity ratio of 1.58 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, WNR has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The gross profit margin for WESTERN REFINING INC is currently extremely low, coming in at 4.50%. Regardless of WNR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WNR's net profit margin of -0.40% significantly underperformed when compared to the industry average.
- WNR, with its decline in revenue, slightly underperformed the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- WESTERN REFINING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WESTERN REFINING INC continued to lose money by earning -$0.20 versus -$4.50 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus -$0.20).
- Powered by its strong earnings growth of 91.89% and other important driving factors, this stock has surged by 233.67% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.