NEW YORK ( TheStreet) -- Toreador Resources Corporation (Nasdaq: TRGL) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and generally weak debt management. Highlights from the ratings report include:
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TOREADOR RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, TRGL's quick ratio is somewhat strong at 1.32, demonstrating the ability to handle short-term liquidity needs.
- The gross profit margin for TOREADOR RESOURCES CORP is currently lower than what is desirable, coming in at 34.90%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -85.40% is significantly below that of the industry average.
- 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 Oil, Gas & Consumable Fuels industry. The net income has decreased by 12.5% when compared to the same quarter one year ago, dropping from -$4.96 million to -$5.58 million.