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) -- TransGlobe Energy (Nasdaq: TGA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- TGA's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.04, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 67.39% to $109.23 million when compared to the same quarter last year. In addition, TRANSGLOBE ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 16.59%.
- The gross profit margin for TRANSGLOBE ENERGY CORP is rather high; currently it is at 66.82%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TGA's net profit margin of 8.48% compares favorably to the industry average.
- TGA, with its decline in revenue, underperformed when compared the industry average of 0.6%. Since the same quarter one year prior, revenues fell by 12.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.