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"We rate EXTERRAN HOLDINGS INC (EXH) 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 expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity."
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. Along with this, the net profit margin of 4.66% is above that of the industry average.
- Net operating cash flow has slightly increased to $157.52 million or 6.70% when compared to the same quarter last year. In addition, EXTERRAN HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of -2.99%.
- EXH, with its decline in revenue, underperformed when compared the industry average of 8.2%. 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.
- The debt-to-equity ratio of 1.09 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, EXH maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, EXTERRAN HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: EXH Ratings Report
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