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TheStreet Open House

Why Equal Energy (EQU) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of Equal Energy (EQU) are up 8.70% to $4.75 Friday afternoon.

The stock is trading at a higher than average volume of 428,514, compared to the energy company's three month average of 298,206 shares.

Today, Montclair Energy LLC published a proposal to maximize shareholder value at Equal Energy, through a recapitalization of the company.

The proposal from Montclair gives a detailed analysis of the superiority of Equal Energy conducting a recapitalization, instead of going through with the pending sale to Petroflow Energy Corporation.

The Montclair analysis came to the conclusion that the Petroflow offer undervalues Equal Energy, the sale of the company would keep investors from being a part of the company's future potential and a levered share repurchase would give investors an immediate capital return.

Must Read: Warren Buffett's 10 Favorite Growth Stocks

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TheStreet Ratings team rates EQUAL ENERGY LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EQUAL ENERGY LTD (EQU) 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 increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share and deteriorating net income."

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

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results.
  • EQU's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EQU has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EQUAL ENERGY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • EQUAL ENERGY LTD 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, EQUAL ENERGY LTD reported lower earnings of $0.17 versus $0.82 in the prior year.
  • 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 95.7% when compared to the same quarter one year ago, falling from $61.83 million to $2.65 million.
  • You can view the full analysis from the report here: EQU Ratings Report

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