NEW YORK ( TheStreet) -- Comstock Resources (NYSE: CRK) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and generally weak debt management. Highlights from the ratings report include:
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, COMSTOCK RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $66.98 million or 10.08% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- CRK's debt-to-equity ratio of 0.64 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CRK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.68 is low and demonstrates weak liquidity.
- In its most recent trading session, CRK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for COMSTOCK RESOURCES INC is currently very high, coming in at 81.90%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.50% trails the industry average.