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) -- Hallador Energy (Nasdaq: HNRG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
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- The revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 5.8%. 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.
- HNRG's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HNRG has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
- 42.60% is the gross profit margin for HALLADOR ENERGY CO which we consider to be strong. Regardless of HNRG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HNRG's net profit margin of 17.12% compares favorably to the industry average.
- The share price of HALLADOR ENERGY CO has not done very well: it is down 21.37% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 50.7% when compared to the same quarter one year ago, falling from $12.56 million to $6.19 million.
-- Written by a member of TheStreet Ratings Staff