NEW YORK ( TheStreet) -- Copano Energy (Nasdaq: CPNO) 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 35.7%. Since the same quarter one year prior, revenues rose by 48.8%. 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 significantly increased by 60.90% to $46.78 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 32.53%.
- COPANO ENERGY LLC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COPANO ENERGY LLC swung to a loss, reporting -$0.36 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.36).
- CPNO's debt-to-equity ratio of 1.00 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.80 is weak.
- This stock has managed to decline in share value by 4.31% over the past twelve months. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.