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TheStreet Open House

Why Cimarex Energy (XEC) Stock Is Up Today

Stocks in this article: XEC

NEW YORK (TheStreet) -- Cimarex Energy (XEC) was gaining 8% to $129.62 Wednesday after a positive first quarter and news that it will acquire Cena-Woodford assets for about $249 million.

For the first quarter Cimarex Energy reported earnings of $1.67 a share, beating the Capital IQ Consensus Estimate of $1.52 a share by 15 cents. Revenue grew 41% year-over-year to $599.2 million. Analysts expected revenue of $542.04 million for the quarter.

Cimarex separately announced that it will acquire oil and gas assets in the Cena-Woodford shale in Western Oklahoma for $497.4 million. Cimarex will sell a 50% interest in the assets to Devon Energy (DVN) for $248.7 million. The deal is expected to close on or before June 30.

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TheStreet Ratings team rates CIMAREX ENERGY CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CIMAREX ENERGY CO (XEC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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 17.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 107.89% and other important driving factors, this stock has surged by 64.24% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, XEC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CIMAREX ENERGY CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CIMAREX ENERGY CO increased its bottom line by earning $6.49 versus $4.08 in the prior year. This year, the market expects an improvement in earnings ($6.61 versus $6.49).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 108.6% when compared to the same quarter one year prior, rising from $99.15 million to $206.83 million.
  • Net operating cash flow has slightly increased to $383.60 million or 7.56% when compared to the same quarter last year. In addition, CIMAREX ENERGY CO has also modestly surpassed the industry average cash flow growth rate of 5.61%.
  • You can view the full analysis from the report here: XEC 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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