Plains Exploration & Production Company Stock Downgraded (PXP)

NEW YORK (TheStreet) -- Plains Exploration & Production Company (NYSE:PXP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally poor debt management.

Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 21.8%. 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 increased to $335.41 million or 15.67% when compared to the same quarter last year. In addition, PLAINS EXPLORATION & PROD CO has also modestly surpassed the industry average cash flow growth rate of 9.08%.
• PLAINS EXPLORATION & PROD CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($3.10 versus $1.43).
• 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 Oil, Gas & Consumable Fuels industry and the overall market, PLAINS EXPLORATION & PROD CO's return on equity significantly trails that of both the industry average and the S&P 500.
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 216.0% when compared to the same quarter one year ago, falling from $70.98 million to -$82.32 million.

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Plains Exploration & Production Company, an independent oil and gas company, primarily engages in acquiring, developing, exploring, and producing oil and gas properties in the United States. The company has a P/E ratio of 129.5, below the average energy industry P/E ratio of 133.8 and above the S&P 500 P/E ratio of 17.7. Plains Exploration & Production has a market cap of $5.18 billion and is part of the basic materials sector and energy industry. Shares are up 9.1% year to date as of the close of trading on Tuesday.

You can view the full Plains Exploration & Production Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff

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