NEW YORK ( TheStreet) -- Suburban Propane Partners (NYSE: SPH) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income. Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, SPH has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
- SPH, with its decline in revenue, underperformed when compared the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 22.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Gas Utilities industry and the overall market on the basis of return on equity, SUBURBAN PROPANE PRTNRS -LP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SUBURBAN PROPANE PRTNRS -LP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, SUBURBAN PROPANE PRTNRS -LP reported lower earnings of $3.22 versus $3.23 in the prior year. For the next year, the market is expecting a contraction of 38.8% in earnings ($1.97 versus $3.22).
- 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 Gas Utilities industry. The net income has significantly decreased by 50.6% when compared to the same quarter one year ago, falling from $100.32 million to $49.57 million.
-- Written by a member of TheStreet Ratings Staff