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) -- Superior Energy Services (NYSE: SPN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. 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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- 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that SPN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.78 is high and demonstrates strong liquidity.
- SPN, with its decline in revenue, underperformed when compared the industry average of 8.1%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SUPERIOR ENERGY SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for SUPERIOR ENERGY SERVICES INC is currently lower than what is desirable, coming in at 34.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -27.79% is significantly below that of the industry average.