NEW YORK ( TheStreet) -- Global Geophysical Services (NYSE: GGS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally poor debt management and weak operating cash flow.
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- The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues rose by 25.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GLOBAL GEOPHYSICAL SVCS INC 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GLOBAL GEOPHYSICAL SVCS INC turned its bottom line around by earning $0.16 versus -$1.11 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $0.16).
- The gross profit margin for GLOBAL GEOPHYSICAL SVCS INC is currently very high, coming in at 71.40%. Regardless of GGS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.20% trails the industry average.
- Net operating cash flow has decreased to $38.93 million or 23.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 2.37 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, GGS maintains a poor quick ratio of 0.94, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet Ratings Staff