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) -- Denbury Resources (NYSE: DNR) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for DENBURY RESOURCES INC is rather high; currently it is at 60.02%. Regardless of DNR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DNR's net profit margin of 15.10% compares favorably to the industry average.
- DENBURY RESOURCES INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, DENBURY RESOURCES INC reported lower earnings of $1.11 versus $1.35 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $1.11).
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 21.5% when compared to the same quarter one year ago, dropping from $114.66 million to $89.99 million.
- DNR's debt-to-equity ratio of 0.62 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. Despite the fact that DNR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.52 is low and demonstrates weak liquidity.