NEW YORK ( TheStreet) -- Contango Oil & Gas Company (AMEX: MCF) 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, compelling growth in net income, expanding profit margins, increase in stock price during the past year and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • CONTANGO OIL & GAS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CONTANGO OIL & GAS CO reported lower earnings of $3.08 versus $3.29 in the prior year.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The gross profit margin for CONTANGO OIL & GAS CO is currently very high, coming in at 88.50%. Regardless of MCF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCF's net profit margin of 30.40% significantly outperformed against the industry.
  • 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 864.2% when compared to the same quarter one year prior, rising from $1.74 million to $16.80 million.
  • The revenue growth came in higher than the industry average of 23.1%. Since the same quarter one year prior, revenues rose by 46.2%. Growth in the company's revenue appears to have helped boost the earnings per share.

Contango Oil & Gas Company, an independent natural gas and oil company, explores, develops, produces, and acquires natural gas and oil properties primarily offshore in the Gulf of Mexico. The company was founded in 1986 and is based in Houston, Texas. The company has a P/E ratio of 19.8, above the average energy industry P/E ratio of 19.3 and above the S&P 500 P/E ratio of 17.7. Contango Oil & Gas has a market cap of $910.9 million and is part of the basic materials sector and energy industry. Shares are up 2.4% year to date as of the close of trading on Wednesday.

You can view the full Contango Oil & Gas Ratings Report or get investment ideas from our investment research center.
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