NEW YORK ( TheStreet) -- StealthGas (Nasdaq: GASS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself. 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 526.4% when compared to the same quarter one year prior, rising from $0.99 million to $6.20 million.
- The revenue growth significantly trails the industry average of 35.7%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- STEALTHGAS INC 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, STEALTHGAS INC turned its bottom line around by earning $0.52 versus -$0.60 in the prior year. For the next year, the market is expecting a contraction of 1.9% in earnings ($0.51 versus $0.52).
- GASS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 41.61%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, GASS maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.