NEW YORK ( TheStreet) -- Panhandle Oil and Gas (NYSE: PHX) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 35.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PHX's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PHX has a quick ratio of 2.04, which demonstrates the ability of the company to cover short-term liquidity needs.
- PANHANDLE OIL & GAS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PANHANDLE OIL & GAS INC reported lower earnings of $1.01 versus $1.35 in the prior year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PANHANDLE OIL & GAS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has declined marginally to $7.75 million or 9.72% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PANHANDLE OIL & GAS INC has marginally lower results.
-- Written by a member of TheStreet Ratings Staff