NEW YORK (TheStreet) -- EXCO Resources (XCO - Get Report) was trading lower on Friday on heavier-than-normal trading volume. By late afternoon, shares had taken off 6% to $5.15, and 10.2 million shares had changed hands, nearly double its three-month average daily volume.
The Dallas-based oiler is due to report fourth-quarter and full-year earnings on Feb. 26.
Analysts surveyed by Thomson Reuters expect quarterly net income of 34 cents a share on $656.8 million in revenue. For the full year, consensus is for per-share earnings of 22 cents on $710.66 million gross sales.
TheStreet Ratings team rates EXCO RESOURCES INC as a Sell with a ratings score of D+. The team has this to say about their recommendation:
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"We rate EXCO RESOURCES INC (XCO) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 7.66 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has significantly decreased to $52.14 million or 61.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- XCO has underperformed the S&P 500 Index, declining 22.21% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EXCO RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- EXCO RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to 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, EXCO RESOURCES INC swung to a loss, reporting -$6.51 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus -$6.51).
- You can view the full analysis from the report here: XCO Ratings Report