NEW YORK ( TheStreet) -- Precision Drilling (NYSE: PDS) 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 good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good. Highlights from the ratings report include:
- 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 124.6% when compared to the same quarter one year prior, rising from -$66.55 million to $16.40 million.
- PDS's revenue growth trails the industry average of 46.8%. Since the same quarter one year prior, revenues rose by 31.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 125.00% and other important driving factors, this stock has surged by 75.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- PRECISION DRILLING CORP 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, PRECISION DRILLING CORP reported lower earnings of $0.21 versus $0.66 in the prior year.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Energy Equipment & Services industry and the overall market, PRECISION DRILLING CORP's return on equity is below that of both the industry average and the S&P 500.