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) -- PAA Natural Gas Storage L.P (NYSE: PNG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, solid stock price performance and notable return on equity. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 1.6% when compared to the same quarter one year prior, going from $22.04 million to $22.39 million.
- PNG, with its decline in revenue, underperformed when compared the industry average of 3.4%. Since the same quarter one year prior, revenues fell by 29.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- PAA NATURAL GAS STORAGE LP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PAA NATURAL GAS STORAGE LP increased its bottom line by earning $0.99 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 2.5% in earnings ($0.97 versus $0.99).
- The gross profit margin for PAA NATURAL GAS STORAGE LP is currently lower than what is desirable, coming in at 30.60%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, PNG's net profit margin of 19.87% significantly outperformed against the industry.
-- Written by a member of TheStreet Ratings Staff