NEW YORK ( TheStreet) -- Evolution Petroleum Corporation (AMEX: EPM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • EPM's very impressive revenue growth greatly exceeded the industry average of 35.6%. Since the same quarter one year prior, revenues leaped by 232.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EPM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.85, which clearly demonstrates the ability to cover short-term cash needs.
  • EVOLUTION PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EVOLUTION PETROLEUM CORP continued to lose money by earning -$0.01 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus -$0.01).
  • 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 335.9% when compared to the same quarter one year prior, rising from -$0.49 million to $1.14 million.
  • The gross profit margin for EVOLUTION PETROLEUM CORP is currently very high, coming in at 94.40%. It has increased significantly from the same period last year. Along with this, the net profit margin of 29.40% significantly outperformed against the industry average.

Evolution Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploitation, and development of properties for the production of crude oil and natural gas in the United States. The company has a P/E ratio of 177.5, equal to the average energy industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Evolution has a market cap of $197.3 million and is part of the basic materials sector and energy industry. Shares are up 7.7% year to date as of the close of trading on Tuesday.

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

If you liked this article you might like

What a Difference a Day Makes for New SEC Rule

Cars and Small-but-Strong Energy Stocks in Play

Selling Investors on Cars and Small but Strong Energy Plays

Analysts Off the Mark on Energy Earnings