NEW YORK (TheStreet) -- Resolute Energy (NYSE:REN) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
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- REN'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 46.95%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, RESOLUTE ENERGY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for RESOLUTE ENERGY CORP is rather high; currently it is at 56.90%. Regardless of REN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, REN's net profit margin of -1.20% significantly underperformed when compared to the industry average.
- RESOLUTE ENERGY CORP 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, RESOLUTE ENERGY CORP increased its bottom line by earning $0.37 versus $0.12 in the prior year. For the next year, the market is expecting a contraction of 68.9% in earnings ($0.12 versus $0.37).
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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