NEW YORK ( TheStreet) -- Cloud Peak Energy (NYSE: CLD) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally poor debt management and poor profit margins. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 240.2% when compared to the same quarter one year prior, rising from $12.88 million to $43.82 million.
- 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 16.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CLOUD PEAK ENERGY INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- CLD has underperformed the S&P 500 Index, declining 20.19% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The debt-to-equity ratio of 1.18 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, CLD has managed to keep a strong quick ratio of 1.62, which demonstrates the ability to cover short-term cash needs.
-- Written by a member of TheStreet Ratings Staff