NEW YORK ( TheStreet) -- Regency Energy Partners (NYSE: RGP) 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 also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 250.5% when compared to the same quarter one year prior, rising from -$9.66 million to $14.54 million.
- RGP's revenue growth trails the industry average of 37.4%. Since the same quarter one year prior, revenues rose by 19.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- REGENCY ENERGY PARTNERS LP 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, REGENCY ENERGY PARTNERS LP swung to a loss, reporting -$0.16 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($0.47 versus -$0.16).
- The gross profit margin for REGENCY ENERGY PARTNERS LP is rather low; currently it is at 17.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.10% trails that of the industry average.
- RGP has underperformed the S&P 500 Index, declining 19.37% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.