Editor's Note: 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 NEW YORK ( TheStreet) -- Evolution Petroleum Corporation (AMEX: EPM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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- The revenue growth greatly exceeded the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 44.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EPM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.19, which clearly demonstrates the ability to cover short-term cash needs.
- EVOLUTION PETROLEUM CORP 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, EVOLUTION PETROLEUM CORP turned its bottom line around by earning $0.14 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus $0.14).
- 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 105.1% when compared to the same quarter one year prior, rising from $0.53 million to $1.10 million.
- The gross profit margin for EVOLUTION PETROLEUM CORP is currently very high, coming in at 90.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.90% significantly outperformed against the industry average.
-- Written by a member of TheStreet Ratings Staff