NEW YORK ( TheStreet) -- TGC Industries (Nasdaq: TGE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. 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 TGC INDUSTRIES INC is currently lower than what is desirable, coming in at 27.40%. Regardless of TGE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TGE's net profit margin of 1.90% is significantly lower than the same period one year prior.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Energy Equipment & Services industry and the overall market, TGC INDUSTRIES INC's return on equity is below that of both the industry average and the S&P 500.
- TGC INDUSTRIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TGC INDUSTRIES INC swung to a loss, reporting -$0.06 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus -$0.06).
- TGE's revenue growth trails the industry average of 48.9%. Since the same quarter one year prior, revenues rose by 34.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 148.5% when compared to the same quarter one year prior, rising from -$1.21 million to $0.59 million.