NEW YORK ( TheStreet) -- Berry Petroleum (NYSE: BRY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity. Highlights from the ratings report include:
- BRY's revenue growth has slightly outpaced the industry average of 25.1%. Since the same quarter one year prior, revenues rose by 33.7%. 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 72.44% to $84.01 million when compared to the same quarter last year. In addition, BERRY PETROLEUM has also vastly surpassed the industry average cash flow growth rate of -18.34%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- Currently the debt-to-equity ratio of 1.64 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BERRY PETROLEUM's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff