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) -- Questar (NYSE: STR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Gas Utilities industry and the overall market, QUESTAR CORP's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for QUESTAR CORP is currently very high, coming in at 95.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.83% significantly outperformed against the industry average.
- QUESTAR CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, QUESTAR CORP increased its bottom line by earning $1.15 versus $1.08 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $1.15).
- Net operating cash flow has slightly increased to $81.00 million or 5.88% when compared to the same quarter last year. Despite an increase in cash flow, QUESTAR CORP's average is still marginally south of the industry average growth rate of 9.15%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
-- Written by a member of TheStreet Ratings Staff