NEW YORK ( TheStreet) -- Western Refining (NYSE: WNR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.
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- WESTERN REFINING 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. During the past fiscal year, WESTERN REFINING INC turned its bottom line around by earning $1.16 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings ($4.37 versus $1.16).
- 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 138.3% when compared to the same quarter one year prior, rising from $100.07 million to $238.50 million.
- Net operating cash flow has significantly increased by 84.56% to $306.01 million when compared to the same quarter last year. In addition, WESTERN REFINING INC has also vastly surpassed the industry average cash flow growth rate of -53.87%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WESTERN REFINING INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff