NEW YORK (TheStreet) -- WPX Energy (WPX - Get Report) was falling 10.02% to $17.02 on Tuesday after the company announced late on Monday that its fourth-quarter and full-year earnings would be affected by up $1.4 billion in pretax impairment charges.
The charges stem from a decline in forward market natural gas prices, and approximately $1.1 billion of that total is related to the company's Appalachian properties, while most of the remainder comes from its Powder River properties.
WPX also announced that it has planned a 39% increase in domestic oil volumes for fiscal 2014.
TheStreet Ratings team rates WPX ENERGY INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about its recommendation:
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"We rate WPX ENERGY INC (WPX) a SELL. This is driven by a few notable 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 unimpressive growth in net income, generally high debt management risk and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 78.1% when compared to the same quarter one year ago, falling from -$64.00 million to -$114.00 million.
- Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that WPX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- WPX ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WPX ENERGY INC reported poor results of -$1.24 versus -$0.84 in the prior year. This year, the market expects an improvement in earnings (-$1.21 versus -$1.24).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WPX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 35.41% is the gross profit margin for WPX ENERGY INC which we consider to be strong. Regardless of WPX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WPX's net profit margin of -17.32% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: WPX Ratings Report