NEW YORK ( TheStreet) -- VAALCO Energy (NYSE: EGY) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 23.0%. Since the same quarter one year prior, revenues rose by 14.6%. 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.
- EGY 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 6.17, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for VAALCO ENERGY INC is currently very high, coming in at 88.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.40% trails the industry average.
- VAALCO ENERGY INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VAALCO ENERGY INC turned its bottom line around by earning $0.66 versus -$0.14 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.66).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, VAALCO ENERGY INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
-- Written by a member of TheStreet RatingsStaff