Tengasco Inc. Stock Downgraded (TGC)

NEW YORK ( TheStreet) -- Tengasco (AMEX: TGC) 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, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 35.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 146.6% when compared to the same quarter one year prior, rising from $0.35 million to $0.87 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TENGASCO INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • After a year of stock price fluctuations, the net result is that TGC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to $0.81 million or 52.87% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Tengasco, Inc. engages in the exploration for and production of oil and natural gas in the United States. It holds interests primarily in the oil properties located in Kansa; and in the Swan Creek field located in Tennessee. The company has a P/E ratio of 9.9, above the average energy industry P/E ratio of 8.8 and below the S&P 500 P/E ratio of 17.7. Tengasco has a market cap of $48 million and is part of the basic materials sector and energy industry. Shares are up 4% year to date as of the close of trading on Friday.

You can view the full Tengasco Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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