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.