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) -- Rentech (Nasdaq: RTK) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
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- RENTECH INC has improved earnings per share by 45.5% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RENTECH INC turned its bottom line around by earning $0.00 versus -$0.06 in the prior year. This year, the market expects an increase in earnings to $0.05 from $0.00.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 40.8% when compared to the same quarter one year prior, rising from -$24.53 million to -$14.53 million.
- Compared to its price level of one year ago, RTK is down 31.25% to its most recent closing price of 1.76. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for RENTECH INC is currently extremely low, coming in at 5.08%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.33% is significantly below that of the industry average.
- The debt-to-equity ratio is very high at 2.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.