Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Exterran Holdings (NYSE: EXH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 32.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- EXTERRAN HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, EXTERRAN HOLDINGS INC continued to lose money by earning -$1.68 versus -$5.27 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$1.68).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 106.1% when compared to the same quarter one year prior, rising from -$152.61 million to $9.34 million.
- Powered by its strong earnings growth of 109.24% and other important driving factors, this stock has surged by 53.21% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The gross profit margin for EXTERRAN HOLDINGS INC is currently lower than what is desirable, coming in at 30.65%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.11% significantly trails the industry average.