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NEW YORK (TheStreet) -- Evolution Petroleum (EPM) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EVOLUTION PETROLEUM CORP (EPM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EPM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 14.81, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for EVOLUTION PETROLEUM CORP is currently very high, coming in at 92.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.18% significantly outperformed against the industry average.
- EPM, with its decline in revenue, slightly underperformed the industry average of 6.7%. Since the same quarter one year prior, revenues fell by 13.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $0.63 million or 59.47% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EVOLUTION PETROLEUM CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: EPM Ratings Report