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TheStreet Open House

Why Rosetta Resources (ROSE) Stock Is Down Today

NEW YORK (TheStreet) -- Rosetta Resources (ROSE) was falling -6.3% to $44.39 Tuesday after missing analysts' expectations for earnings and revenue in the first quarter.

For the first quarter Rosetta Resources reported earnings of 74 cents a share, missing the Capital IQ Consensus Estimate of 81 cents a share by 7 cents. Revenue grew 20.5% year-over-year to $214.56 million in the quarter. Analysts predicted revenue of $239.77 million for the quarter.

"Our first quarter results are in line with our expectations and we are on track to deliver on our annual targets," chairman, president, and CEO Jim Craddock said in a press release.. "Rosetta made significant progress in the advancement of our Delaware Basin horizontal program as we doubled our inventory of net well locations. Also, during the quarter, our Eagle Ford program was a key driver of our operational success. As the year progresses, we will maintain our focus on program execution and evaluation of various long-term growth catalysts in our core areas."

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TheStreet Ratings team rates ROSETTA RESOURCES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROSETTA RESOURCES INC (ROSE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $121.59 million or 9.20% when compared to the same quarter last year. In addition, ROSETTA RESOURCES INC has also modestly surpassed the industry average cash flow growth rate of 5.61%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ROSETTA RESOURCES INC's earnings per share declined by 40.0% 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, ROSETTA RESOURCES INC increased its bottom line by earning $3.43 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.43).
  • The gross profit margin for ROSETTA RESOURCES INC is currently very high, coming in at 78.97%. Regardless of ROSE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROSE's net profit margin of 14.40% compares favorably to the industry average.
  • You can view the full analysis from the report here: ROSE Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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