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NEW YORK (TheStreet) -- Magellan Petroleum (MPET) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate MAGELLAN PETROLEUM CORP (MPET) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for MAGELLAN PETROLEUM CORP is rather low; currently it is at 23.65%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MPET's net profit margin of -165.22% significantly underperformed when compared to the industry average.
- In its most recent trading session, MPET has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. This company's share value has not moved any higher or lower since its value 12 months ago, and we feel the risks associated with investing in this company will outweigh any potential future gains.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MAGELLAN PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- MPET, with its decline in revenue, underperformed when compared the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 25.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- MPET 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. To add to this, MPET has a quick ratio of 2.25, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: MPET Ratings Report