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) -- Laredo Petroleum (NYSE: LPI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- LPI's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 83.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.47% significantly outperformed against the industry average.
- 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 476.9% when compared to the same quarter one year prior, rising from $11.83 million to $68.24 million.
- Powered by its strong earnings growth of 433.33% and other important driving factors, this stock has surged by 68.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- LAREDO PETROLEUM INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LAREDO PETROLEUM INC increased its bottom line by earning $0.85 versus $0.47 in the prior year. For the next year, the market is expecting a contraction of 3.5% in earnings ($0.82 versus $0.85).