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"We rate U S ENERGY CORP/WY (USEG) a SELL. This is driven by a few notable 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. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- USEG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 61.25%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, U S ENERGY CORP/WY's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for U S ENERGY CORP/WY is rather high; currently it is at 63.38%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.59% trails the industry average.
- Net operating cash flow has increased to $5.41 million or 29.55% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.59%.
- USEG's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, USEG has a quick ratio of 1.91, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: USEG Ratings Report