NEW YORK ( TheStreet) -- Vanguard Natural Resources (NYSE: VNR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- VNR's very impressive revenue growth greatly exceeded the industry average of 14.5%. Since the same quarter one year prior, revenues leaped by 26740.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 93.3% when compared to the same quarter one year prior, rising from -$30.41 million to -$2.02 million.
- The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- VANGUARD NATURAL RESOURCES reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VANGUARD NATURAL RESOURCES increased its bottom line by earning $2.12 versus $1.22 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($2.07 versus $2.12).
- The gross profit margin for VANGUARD NATURAL RESOURCES is rather high; currently it is at 55.20%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VNR's net profit margin of -3.60% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet RatingsStaff