NEW YORK ( TheStreet) -- Vectren (NYSE: VVC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and generally poor debt management.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 18.2%. 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 Multi-Utilities industry. The net income increased by 73.6% when compared to the same quarter one year prior, rising from $8.70 million to $15.10 million.
  • 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Multi-Utilities industry and the overall market, VECTREN CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for VECTREN CORP is currently lower than what is desirable, coming in at 25.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.20% significantly trails the industry average.

Vectren Corporation provides energy delivery services to residential, commercial, and industrial and other customers in Indiana and west central Ohio. The company has a P/E ratio of 18.1, equal to the average utilities industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Vectren has a market cap of $2.2 billion and is part of the utilities sector and utilities industry. Shares are up 4% year to date as of the close of trading on Friday.

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