NEW YORK ( TheStreet) -- Crosstex Energy (Nasdaq: XTEX) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • 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 significantly decreased by 104.3% when compared to the same quarter one year ago, falling from $55.87 million to -$2.38 million.
  • The gross profit margin for CROSSTEX ENERGY LP is currently extremely low, coming in at 14.70%. Regardless of XTEX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.60% trails the industry average.
  • XTEX, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • CROSSTEX ENERGY LP 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CROSSTEX ENERGY LP continued to lose money by earning -$1.13 versus -$2.24 in the prior year. This year, the market expects an improvement in earnings (-$0.32 versus -$1.13).
  • Powered by its strong earnings growth of 76.08% and other important driving factors, this stock has surged by 56.80% 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.

Crosstex Energy, L.P., through its subsidiary, Crosstex Energy Services, L.P. operates as an independent midstream energy company. It engages in the gathering, transmission, processing, and marketing of natural gas and natural gas liquids in the north Texas Barnett shale area and Louisiana. Crosstex Energy has a market cap of $858.2 million and is part of the basic materials sector and energy industry. Shares are up 16.7% year to date as of the close of trading on Monday.

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