NEW YORK ( TheStreet) -- GeoMet (Nasdaq: GMET) 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, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we find that the company has not been very careful in the management of its balance sheet.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.30, which clearly demonstrates the inability to cover short-term cash needs.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GEOMET INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • 46.80% is the gross profit margin for GEOMET INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -40.80% is in-line with the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 74.3% when compared to the same quarter one year prior, rising from -$11.68 million to -$3.00 million.
  • Powered by its strong earnings growth of 60.00% and other important driving factors, this stock has surged by 84.26% 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.

GeoMet, Inc., an independent energy company, engages in the exploration for, development, and production of natural gas from coal seams and non-conventional shallow gas. GeoMet has a market cap of $70.8 million and is part of the basic materials sector and energy industry. Shares are up 42.6% year to date as of the close of trading on Thursday.

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