NEW YORK ( TheStreet) -- Western Refining (NYSE: WNR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 24.9%. Since the same quarter one year prior, revenues rose by 22.0%. 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.
- Net operating cash flow has significantly increased by 162.71% to $107.65 million when compared to the same quarter last year. In addition, WESTERN REFINING INC has also vastly surpassed the industry average cash flow growth rate of -4.40%.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WESTERN REFINING INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for WESTERN REFINING INC is rather low; currently it is at 20.70%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, WNR's net profit margin of -2.80% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 752.6% when compared to the same quarter one year ago, falling from -$7.57 million to -$64.56 million.
-- Written by a member of TheStreet Ratings Staff