NEW YORK ( TheStreet) -- Cimarex Energy Company (NYSE: XEC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- XEC's revenue growth trails the industry average of 25.2%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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 $320.75 million or 31.58% when compared to the same quarter last year. In addition, CIMAREX ENERGY CO has also vastly surpassed the industry average cash flow growth rate of -18.45%.
- The gross profit margin for CIMAREX ENERGY CO is currently very high, coming in at 71.80%. Regardless of XEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, XEC's net profit margin of 27.20% significantly outperformed against the industry.
- XEC's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that XEC's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CIMAREX ENERGY CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
-- Written by a member of TheStreet RatingsStaff