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Why Kosmos Energy (KOS) Stock Is Down Today

NEW YORK (TheStreet) -- Kosmos Energy (KOS - Get Report) was falling -5.7% to $10.01 Thursday after announcing the pricing of a public offering of 17 million shares offered by Blackstone Group (BX - Get Report) and Warburg Pincus.

The company pried the offering of 17 million shares at $9.92 a share. The underwriters of the offering were given a 30-day option to buy up to 2.55 million more shares from the selling shareholders. The offering is expected to close on July 15, 2014.

Ksmos will not receive any proceeds from the offering.

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

"We rate KOSMOS ENERGY LTD (KOS) 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 net income, expanding profit margins and good cash flow from operations. 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:

  • 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 273.1% when compared to the same quarter one year prior, rising from $20.09 million to $74.97 million.
  • The gross profit margin for KOSMOS ENERGY LTD is currently very high, coming in at 92.33%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 35.22% significantly outperformed against the industry average.
  • KOS's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.51 is very high and demonstrates very strong liquidity.
  • KOS, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KOSMOS ENERGY LTD'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: KOS Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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