NEW YORK ( TheStreet) -- Synergy Resources Corporation (AMEX: SYRG) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- SYRG's very impressive revenue growth greatly exceeded the industry average of 25.0%. Since the same quarter one year prior, revenues leaped by 205.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SYRG's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.05, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for SYNERGY RESOURCES CORP is currently very high, coming in at 86.30%. Regardless of SYRG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SYRG's net profit margin of 98.40% significantly outperformed against the industry.
- 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 the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SYNERGY RESOURCES CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- SYRG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.29%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
-- Written by a member of TheStreet RatingsStaff