NEW YORK ( TheStreet) -- Advantage Oil & Gas (NYSE: AAV) 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, 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 find that the growth in the company's net income has been quite unimpressive. 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 27.8% when compared to the same quarter one year ago, falling from -$14.21 million to -$18.17 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ADVANTAGE OIL & GAS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.23 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has increased to $55.27 million or 34.19% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.77%.
- Compared to its closing price of one year ago, AAV's share price has jumped by 29.04%, exceeding the performance of the broader market during that same time frame. 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.