Exterran Holdings Inc Stock Upgraded (EXH)

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) -- Exterran Holdings (NYSE: EXH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 31.3% when compared to the same quarter one year prior, rising from $9.34 million to $12.26 million.
  • Compared to its closing price of one year ago, EXH's share price has jumped by 64.06%, exceeding the performance of the broader market during that same time frame. 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.
  • Net operating cash flow has increased to $68.71 million or 18.72% when compared to the same quarter last year. Despite an increase in cash flow, EXTERRAN HOLDINGS INC's average is still marginally south of the industry average growth rate of 27.21%.
  • The revenue fell significantly faster than the industry average of 20.4%. Since the same quarter one year prior, revenues fell by 11.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, EXTERRAN HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.

Exterran Holdings, Inc., together with its subsidiaries, provides operations, maintenance, service, and equipment for the oil and natural gas production, processing, and transportation applications. The company's North America Contract Operations segment offers natural gas compression services. Exterran has a market cap of $2.99 billion and is part of the basic materials sector and energy industry. Shares are up 31.3% year to date as of the close of trading on Friday.

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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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