NEW YORK ( TheStreet) -- StealthGas (Nasdaq: GASS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management and weak operating cash flow.

Highlights from the ratings report include:
  • 49.90% is the gross profit margin for STEALTHGAS INC which we consider to be strong. Regardless of GASS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.00% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, STEALTHGAS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to $8.46 million or 53.20% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, GASS has a quick ratio of 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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 decreased by 5.5% when compared to the same quarter one year ago, dropping from $1.61 million to $1.53 million.

StealthGas Inc., through its subsidiaries, engages in the ownership of a fleet of liquefied petroleum gas (LPG) carriers that provide international seaborne transportation services to LPG producers and users in Greece and internationally. The company has a P/E ratio of 11, below the S&P 500 P/E ratio of 17.7. StealthGas has a market cap of $118.2 million and is part of the services sector and transportation industry. Shares are down 30.2% year to date as of the close of trading on Tuesday.

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