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Why SandRidge Energy (SD) Stock Is Up After-Hours Wednesday

Stocks in this article: SD

NEW YORK (TheStreet) -- SandRidge Energy (SD) was gaining 3.4% to $6.946 in after-hours trading Wednesday after beating analysts' estimates for earnings and revenue in the first quarter.

For the first quarter SandRidge posted earnings of 7 cents a share, beating the Capital IQ Consensus Estimate of 2 cents a share by 5 cents. Revenue fell -13.4% from the year-ago quarter to $443.05 million, but still beat analysts' estimates of $406.43 million.

"We are well on our way to deliver the early part of our three year growth plan introduced at our March analyst day," SandRidge president and CEO James Bennett said. "Resumed normal weather conditions have us back on track, with recent activity offsetting the temporary extreme weather challenges in our first quarter Mid-Continent operations. We produced 55 MBoe per day in April compared to our first quarter average of 51 MBoe per day, and brought on 45 new wells in April, compared to 71 wells for all of the first quarter."

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

"We rate SANDRIDGE ENERGY INC (SD) 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 solid stock price performance, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk."

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

  • 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 106.6% when compared to the same quarter one year prior, rising from -$287.90 million to $19.08 million.
  • Powered by its strong earnings growth of 101.58% and other important driving factors, this stock has surged by 33.46% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • SANDRIDGE ENERGY INC reported significant earnings per share improvement 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, SANDRIDGE ENERGY INC reported poor results of -$1.27 versus -$0.14 in the prior year. This year, the market expects an improvement in earnings ($0.10 versus -$1.27).
  • Currently the debt-to-equity ratio of 1.75 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, SD's quick ratio is somewhat strong at 1.25, demonstrating the ability to handle short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANDRIDGE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SD 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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