Panhandle Oil And Gas Inc. Stock Downgraded (PHX)

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) -- Panhandle Oil and Gas (NYSE: PHX) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 20.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PHX's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PHX has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for PANHANDLE OIL & GAS INC is currently very high, coming in at 75.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.23% trails the industry average.
  • In its most recent trading session, PHX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PANHANDLE OIL & GAS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
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Panhandle Oil and Gas Inc. engages in the acquisition, management, and development of oil and natural gas properties in the United States. Its mineral and leasehold properties are located primarily in Arkansas, New Mexico, North Dakota, Oklahoma, and Texas. The company has a P/E ratio of 39.3, above the S&P 500 P/E ratio of 17.7. Panhandle Oil and Gas has a market cap of $236.9 million and is part of the basic materials sector and energy industry. Shares are down 0.8% year to date as of the close of trading on Thursday.

You can view the full Panhandle Oil and Gas Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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