NEW YORK ( TheStreet) -- Magellan Petroleum Corporation (Nasdaq: MPET) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- MAGELLAN PETROLEUM CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, MAGELLAN PETROLEUM CORP reported poor results of -$0.69 versus -$0.04 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 952.8% when compared to the same quarter one year ago, falling from -$2.91 million to -$30.58 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MAGELLAN PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$1.66 million or 154.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for MAGELLAN PETROLEUM CORP is currently lower than what is desirable, coming in at 31.30%. Regardless of MPET's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MPET's net profit margin of -593.80% significantly underperformed when compared to the industry average.