NEW YORK ( TheStreet) -- Natural Resources Partners (NYSE: NRP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 35.5%. Since the same quarter one year prior, revenues rose by 28.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $79.64 million or 28.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.26%.
  • NATURAL RESOURCE PARTNERS LP 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. 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, NATURAL RESOURCE PARTNERS LP increased its bottom line by earning $1.52 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.52).
  • 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 on the basis of return on equity, NATURAL RESOURCE PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 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 172.9% when compared to the same quarter one year ago, falling from $40.15 million to -$29.29 million.

Natural Resource Partners L.P., through its subsidiaries, engages in the ownership and management of coal properties in Appalachia, the Illinois Basin, and the Northern Powder River Basin regions of the United States. The company has a P/E ratio of 15.8, below the average metals & mining industry P/E ratio of 16.3 and below the S&P 500 P/E ratio of 17.7. Natural has a market cap of $3.1 billion and is part of the basic materials sector and metals & mining industry. Shares are down 11.1% year to date as of the close of trading on Friday.

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