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Inergy, L.P. Message Board

  • wareham2620 wareham2620 Sep 18, 2008 5:31 PM Flag

    TSC Ratings' Updates: Herman Miller

    Inergy LP(NRGY Quote - Cramer on NRGY - Stock Picks) has been downgraded from a buy to hold. Inergy engages in the sale, distribution, storage, marketing, trading, processing and fractionation of propane, natural gas, and other natural gas liquids in the U.S. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share 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 poor debt management and poor profit margins.

    NRGY's very impressive revenue growth exceeded the industry average of 30.2%. Since the same quarter one year prior, revenue leaped by 51.5%. Growth in the company's revenue appears to have helped boost the earnings per share.

    When Will Solar Be Cost-Competitive?Top Closed-End Funds Sniff Out Energy BetsOil: What You Need to Know Related Articles States Mobilize to Protect AIG Customers STOCK PICKS: Top 5 Mid-Caps for Sept. 18 TSC Ratings' Updates: MB Financial Article Tools Email this Article Print this Article Rss Feed NRGY has improved earnings per share by 22.1% in the most-recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NRGY turned its bottom line around by earning 72 cents vs. -12 cents in the prior year. This year, the market expects an improvement in earnings (89 cents vs. 72 cents).
    The gross profit margin for NRGY is rather low; currently it is at 22.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.50% is significantly below that of the industry average.

    NRGY's stock share price has done very poorly compared with where it was a year ago: Despite any rallies, the net result is that it is down by 35.72%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NRGY is still more expensive than most of the other companies in its industry.