NEW YORK ( TheStreet) -- Eastern American Natural Gas (NYSE: NGT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and premium valuation.

Highlights from the ratings report include:
  • NGT 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 9.11, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for EASTERN AMERN NATURAL GAS TR is currently very high, coming in at 85.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 74.50% significantly outperformed against the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, EASTERN AMERN NATURAL GAS TR has underperformed in comparison with the industry average, but has greatly 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 decreased by 7.5% when compared to the same quarter one year ago, dropping from $1.55 million to $1.43 million.

Eastern American Natural Gas Trust, a grantor trust, engages in acquiring and holding net profits interests in gas properties. The company has a P/E ratio of 25.2, equal to the average financial services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Eastern American Natural Gas has a market cap of $136.9 million and is part of the financial sector and financial services industry. Shares are up 0.9% year to date as of the close of trading on Thursday.

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