Tesoro Corporation Stock Buy Recommendation Reiterated (TSO)

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) -- Tesoro Corporation (NYSE: TSO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 7.9%. 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.
  • Compared to its closing price of one year ago, TSO's share price has jumped by 73.48%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • TESORO CORP's earnings per share declined by 19.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESORO CORP turned its bottom line around by earning $3.76 versus -$0.23 in the prior year. This year, the market expects an improvement in earnings ($6.81 versus $3.76).
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.

Tesoro Corporation, together with its subsidiaries, engages in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. Tesoro has a market cap of $5.83 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 9.8, below the S&P 500 P/E ratio of 17.7. Shares are up 77.7% year to date as of the close of trading on Wednesday.

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

--Written by a member of TheStreet Ratings Staff.

Holiday Special: Subscribe to Action Alerts PLUS to see how Jim Cramer trades his $2.5 Million+ portfolio for 51% off the list price. Your first 14-days are FREE: Sign up today to get e-mail alerts before every trade
null

If you liked this article you might like

BP Files for IPO of U.S. Pipeline Assets

Tesoro Stock Jumps on Goldman 'Conviction Buy' Addition

Analysts' Actions -- Ambarella, BlackBerry, PVH Corp., Zynga and More

Market Recon: The French Election Is out of the Way; the Focus Returns to Earnings

Top 7 Energy Stocks to Own for 2017