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)
-- Gas Natural (AMEX:
EGAS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 27.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 75.5% when compared to the same quarter one year prior, rising from $1.83 million to $3.22 million.
- Net operating cash flow has increased to $1.56 million or 28.83% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.46%.
- The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that EGAS's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
Gas Natural Inc. is engaged in the distribution and sale of natural gas to residential, commercial, and industrial customers. It operates through Natural Gas Operations, Marketing and Production Operations, and Pipeline Operations segments. Gas Natural has a market cap of $110 million and is part of the utilities sector and utilities industry. Shares are up 31% year to date as of the close of trading on Monday.
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