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"We rate CSI COMPRESSCO LP (CCLP) 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 robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CCLP's very impressive revenue growth greatly exceeded the industry average of 16.1%. Since the same quarter one year prior, revenues leaped by 220.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $10.39 million or 8.36% when compared to the same quarter last year. Despite an increase in cash flow, CSI COMPRESSCO LP's average is still marginally south of the industry average growth rate of 17.74%.
- CCLP's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.75 is weak.
- 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. Compared to other companies in the Energy Equipment & Services industry and the overall market, CSI COMPRESSCO LP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CSI COMPRESSCO LP is currently lower than what is desirable, coming in at 34.88%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -2.71% is significantly below that of the industry average.
- You can view the full analysis from the report here: CCLP Ratings Report
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