Warren Resources Inc. Stock Upgraded (WRES)

NEW YORK ( TheStreet) -- Warren Resources (Nasdaq: WRES) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • WARREN RESOURCES INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WARREN RESOURCES INC increased its bottom line by earning $0.30 versus $0.28 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus $0.30).
  • 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 855.7% when compared to the same quarter one year prior, rising from $0.31 million to $3.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.9%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for WARREN RESOURCES INC is currently very high, coming in at 76.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.00% is above that of the industry average.
  • Net operating cash flow has increased to $14.57 million or 26.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.62%.
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Warren Resources, Inc., an independent energy company, engages in the exploration, development, and production of onshore crude oil and gas reserves in the United States. The company has a P/E ratio of 11.4, below the average energy industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. Warren has a market cap of $225.3 million and is part of the basic materials sector and energy industry. Shares are up 5.5% year to date as of the close of trading on Tuesday.

You can view the full Warren Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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