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) -- Alon USA Energy (NYSE: ALJ) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.0%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- ALON USA ENERGY INC 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALON USA ENERGY INC reported lower earnings of $0.29 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.29).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 163.0% when compared to the same quarter one year ago, falling from $22.19 million to -$13.99 million.
- The gross profit margin for ALON USA ENERGY INC is currently extremely low, coming in at 5.31%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.77% trails that of the industry average.
- Net operating cash flow has significantly decreased to $52.57 million or 69.49% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.