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) -- Questar (NYSE: STR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.1%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- QUESTAR CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, QUESTAR CORP increased its bottom line by earning $1.19 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $1.19).
- Net operating cash flow has slightly increased to $86.40 million or 6.66% when compared to the same quarter last year. Despite an increase in cash flow, QUESTAR CORP's cash flow growth rate is still lower than the industry average growth rate of 56.04%.
- The gross profit margin for QUESTAR CORP is currently very high, coming in at 88.90%. Regardless of STR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STR's net profit margin of -12.83% significantly underperformed when compared to the industry average.