NEW YORK ( TheStreet) -- Petrobras Argentina (NYSE: PZE) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- The gross profit margin for PETROBRAS ARGENTINA SA is rather low; currently it is at 24.30%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 16.80% is above that of the industry average.
- In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PETROBRAS ARGENTINA SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- PETROBRAS ARGENTINA SA 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. This trend suggests that the performance of the business is improving. During the past fiscal year, PETROBRAS ARGENTINA SA increased its bottom line by earning $1.48 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($2.18 versus $1.48).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.