NEW YORK (TheStreet) -- Emerald Oil (EOX - Get Report) had coverage initiated with a "buy" rating by analysts at Brean Capital on Monday while setting a $10 price target on the company's shares.
The company's large holdings -- 91,000 acres -- in the oil-rich Bakken Shale region and high oil prices due to the conflict in Iraq were reasons for the upgrade.
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Shares are flat in early market trading today.
TheStreet Ratings team rates EMERALD OIL INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMERALD OIL INC (EOX) 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, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. 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:
- EOX's very impressive revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues leaped by 145.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
- 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for EMERALD OIL INC is currently very high, coming in at 74.24%. Regardless of EOX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EOX's net profit margin of -9.03% significantly underperformed when compared to the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EMERALD OIL 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: EOX Ratings Report