NEW YORK ( TheStreet) -- Frontier Oil Corporation (NYSE: FTO) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 447.4% when compared to the same quarter one year prior, rising from -$40.26 million to $139.87 million.
- FRONTIER OIL CORP 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. During the past fiscal year, FRONTIER OIL CORP turned its bottom line around by earning $0.35 versus -$0.81 in the prior year. This year, the market expects an improvement in earnings ($3.03 versus $0.35).
- Powered by its strong earnings growth of 438.46% and other important driving factors, this stock has surged by 79.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FTO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels.
- The revenue growth came in higher than the industry average of 25.0%. Since the same quarter one year prior, revenues rose by 49.7%. Growth in the company's revenue appears to have helped boost the earnings per share.