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) -- MarkWest Energy Partners (NYSE: MWE) 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, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 49.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $153.06 million or 14.84% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.10%.
- Compared to its closing price of one year ago, MWE's share price has jumped by 30.26%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The gross profit margin for MARKWEST ENERGY PARTNERS LP is currently lower than what is desirable, coming in at 30.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.61% is significantly below that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 64.6% when compared to the same quarter one year ago, falling from -$14.34 million to -$23.60 million.