NEW YORK (TheStreet) -- Tesoro  (TSO) was falling 5.27% to $47.32 on Thursday after the independent refiner reported fourth-quarter earnings that missed analysts' expectations.

The San Antonio-based company earned $5 million, or 4 cents a share, excluding items, in the quarter. Analysts were calling for earnings of 31 cents a share.

Tesoro said fourth-quarter results included $40 million in stock-based compensation expenses, along with a net loss of $3 million, or 2 cents a share, from the sale of its Hawaii refinery. Including these items, the company posted a loss of $7 million, or 5 cents a share, down from net income of $27 million, or 19 cents a share, in the same period a year earlier.

"Despite a lower margin and crude oil differential environment, and weaker earnings relative to 2012, 2013 was a year of important strategic accomplishments for Tesoro," said President and CEO Greg Goff in the company's statement.  "The acquisition of the Los Angeles refining, marketing and logistics assets, the acquisition of the Northwest Products System and the sale of our business in Hawaii collectively represent significant achievements in the continuing transformation of Tesoro. We returned over $500 million to shareholders in the form of dividends and share repurchases and ended the year with a strong balance sheet even after nearly $3 billion in acquisitions."

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TheStreet Ratings team rates TESORO CORP as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about its recommendation:

"We rate TESORO CORP (TSO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 42.0%. 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 significantly increased by 84.25% to $831.00 million when compared to the same quarter last year. In addition, TESORO CORP has also vastly surpassed the industry average cash flow growth rate of -44.35%.
  • 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.
  • TSO's debt-to-equity ratio of 0.76 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.87 is weak.
  • You can view the full analysis from the report here: TSO Ratings Report