Laredo Petroleum Inc Stock Upgraded (LPI)

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, good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • LPI's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 103.16% to $128.12 million when compared to the same quarter last year. In addition, LAREDO PETROLEUM INC has also vastly surpassed the industry average cash flow growth rate of 18.80%.
  • The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 79.46%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.12% trails the industry average.
  • LAREDO PETROLEUM 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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. This year, the market expects an improvement in earnings ($0.96 versus $0.85).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

Laredo Petroleum, Inc. operates as an independent energy company in the United States. It focuses on the exploration, development, and acquisition of oil and natural gas properties primarily in the Permian region, west Texas. Laredo has a market cap of $3.9 billion and is part of the basic materials sector and energy industry. Shares are down 3.6% year to date as of the close of trading on Monday.

You can view the full Laredo Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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