NEW YORK ( TheStreet) -- Teekay Tankers (NYSE: TNK) has been upgraded by TheStreet Ratings from sell 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 deteriorating net income, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- TNK's revenue growth trails the industry average of 11.7%. Since the same quarter one year prior, revenues slightly increased by 0.1%. 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.
- Despite currently having a low debt-to-equity ratio of 0.53, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TNK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.98 is high and demonstrates strong liquidity.
- The gross profit margin for TEEKAY TANKERS LTD is rather high; currently it is at 55.20%. Regardless of TNK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TNK's net profit margin of 14.30% compares favorably 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 41.6% when compared to the same quarter one year ago, falling from $7.09 million to $4.14 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TEEKAY TANKERS LTD's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff