Rating Change #5
Plains Exploration & Production Company (PXP) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- PXP's revenue growth has slightly outpaced the industry average of 25.1%. Since the same quarter one year prior, revenues rose by 26.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PLAINS EXPLORATION & PROD CO reported significant earnings per share improvement 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 two years. We feel that this trend should continue. During the past fiscal year, PLAINS EXPLORATION & PROD CO increased its bottom line by earning $1.43 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $1.43).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 601.4% when compared to the same quarter one year prior, rising from -$19.49 million to $97.70 million.
- The gross profit margin for PLAINS EXPLORATION & PROD CO is rather high; currently it is at 68.90%. Regardless of PXP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PXP's net profit margin of 18.90% significantly outperformed against the industry.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
Plains Exploration & Production Company, an independent oil and gas company, primarily engages in acquiring, developing, exploring, and producing oil and gas in California and Louisiana. The company has a P/E ratio of 72.6, above the average energy industry P/E ratio of 62.1 and above the S&P 500 P/E ratio of 17.7. Plains Exploration & Production has a market cap of $5.25 billion and is part of the basic materials sector and energy industry. Shares are up 23.9% year to date as of the close of trading on Friday.You can view the full Plains Exploration & Production Ratings Report or get investment ideas from our investment research center.