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"We rate EXTERRAN HOLDINGS INC (EXH) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 36.82% is the gross profit margin for EXTERRAN HOLDINGS INC which we consider to be strong. 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 4.70% trails the industry average.
- EXH, with its decline in revenue, underperformed when compared the industry average of 13.6%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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.
- EXTERRAN HOLDINGS INC's earnings per share declined by 41.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXTERRAN HOLDINGS INC turned its bottom line around by earning $0.89 versus -$1.68 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($0.77 versus $0.89).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has decreased by 16.9% when compared to the same quarter one year ago, dropping from $40.98 million to $34.05 million.
- You can view the full analysis from the report here: EXH Ratings Report