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) -- Northwest Natural Gas (NYSE: NWN) has been upgraded by TheStreet Ratings from hold to buy. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- NWN, with its decline in revenue, underperformed when compared the industry average of 14.8%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Even though the current debt-to-equity ratio is 1.14, it is still below the industry average, suggesting that this level of debt is acceptable within the Gas Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.08 is very low and demonstrates very weak liquidity.
- The share price of NORTHWEST NATURAL GAS CO has not done very well: it is down 5.64% 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. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The gross profit margin for NORTHWEST NATURAL GAS CO is rather low; currently it is at 15.00%. Regardless of NWN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NWN's net profit margin of -11.76% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to $2.68 million or 88.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff