NEW YORK ( TheStreet) -- InterOil Corporation (NYSE: IOC) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 23.1%. Since the same quarter one year prior, revenues rose by 48.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- IOC's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
- INTEROIL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, INTEROIL CORP turned its bottom line around by earning $0.34 versus -$1.01 in the prior year.
- The gross profit margin for INTEROIL CORP is currently extremely low, coming in at 3.30%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 4.60% trails that of the industry average.
- IOC has underperformed the S&P 500 Index, declining 24.75% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet RatingsStaff