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) -- Ocean Rig UDW (Nasdaq: ORIG) has been upgraded by TheStreet Ratings from sell 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 has favored debt over equity in the management of its balance sheet.
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- ORIG's very impressive revenue growth greatly exceeded the industry average of 7.9%. Since the same quarter one year prior, revenues leaped by 50.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OCEAN RIG UDW 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, OCEAN RIG UDW INC turned its bottom line around by earning $0.48 versus -$1.00 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $0.48).
- The gross profit margin for OCEAN RIG UDW INC is rather high; currently it is at 59.96%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.48% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, OCEAN RIG UDW INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.34 is relatively high when compared with the industry average, suggesting a need for better debt level management.