NEW YORK ( TheStreet) -- Nustar Energy L.P (NYSE: NS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 11.7%. Since the same quarter one year prior, revenues rose by 40.6%. 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 94.20% to -$9.61 million when compared to the same quarter last year. In addition, NUSTAR ENERGY LP has also vastly surpassed the industry average cash flow growth rate of 10.52%.
- NUSTAR ENERGY LP's earnings per share declined by 23.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NUSTAR ENERGY LP reported lower earnings of $2.79 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.79).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 7.5% when compared to the same quarter one year ago, dropping from $28.50 million to $26.35 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NS has underperformed the S&P 500 Index, declining 14.05% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff