RECOMMENDATION We rate INERGY LP (NRGY) 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, 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. HIGHLIGHTS NRGY's very impressive revenue growth exceeded the industry average of 32.0%. Since the same quarter one year prior, revenues leaped by 51.5%. Growth in the company's revenue appears to have helped boost the earnings per share. INERGY LP has improved earnings per share by 22.1% in the most recent quarter compared to 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, INERGY LP turned its bottom line around by earning $0.72 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus $0.72). The gross profit margin for INERGY LP 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 to where it was a year ago: Despite any rallies, the net result is that it is down by 58.89%, 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.