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TheStreet Open House

Laredo Petroleum (LPI) Falls Despite Earnings Beat

NEW YORK (TheStreet) -- Laredo Petroleum (LPI) was falling 6.5% to $25.65 on Thursday despite beating analysts' estimates for earnings and revenue.

For the fourth quarter, the company posted earnings of 13 cents a share, better than the Capital IQ Consensus Estimate of 9 cents a share. Revenue rose 1.4% from the year-ago quarter to $153.4 million, beating the $151.3 million that analysts expected.

In 2013, Laredo Petroleum 's production volumes reached 24,960 barrels of oil equivalent per day, up about 21% from 2012 despite weather-related disruptions in the fourth quarter of 2013.

In the first quarter, Laredo Petroleum said it expects to produce between 2.3 million barrels of oil equivalent (MMBoe) and 2.5 MMBoe and 58% of production crude oil. For 2014, the company expects to produce between 12.2 MMBoe and 12.7 MMBoe and 58% of production crude oil.

Must read: Short Interest In Laredo Petroleum Expands By 37.2%

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TheStreet Ratings team rates LAREDO PETROLEUM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about its recommendation:

"We rate LAREDO PETROLEUM INC (LPI) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 18.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 80.87%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.34% is above that of the industry average.
  • LPI's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that LPI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.65 is high and demonstrates strong liquidity.
  • LAREDO PETROLEUM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, LAREDO PETROLEUM INC's EPS of $0.47 remained unchanged from the prior years' EPS of $0.47. This year, the market expects an improvement in earnings ($0.52 versus $0.47).
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LAREDO PETROLEUM INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: LPI Ratings Report

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