NEW YORK (TheStreet) -- Shares of C&J Energy Services (CJES) were falling 10.3% to $3.82 on Wednesday after warned it will see lower revenue than previously expected in the third quarter and lowered its credit facility commitment.

C&J Energy said it now expects its third quarter results to be lower than the guidance it offered during its second quarter earnings call. The company reported revenue of $511 million for the second quarter, and previously said it expected revenue to drop 5% to 10% on a sequential basis.

The oil company expects revenue from its hydraulic fracturing operations to fall 30% quarter over quarter, compared to its previous forecast of a 15% to 25% sequential decline.

In the same announcement C&J Energy said it reduced its revolving credit facility commitment to $400 million from $600 million on Wednesday. The company also suspended the quarterly maximum leverage ratio test and the quarterly minimum interest coverage ratio test and implemented a quarterly minimum EBITDA covenant.

TheStreet Ratings team rates C&J ENERGY SERVICES LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate C&J ENERGY SERVICES LTD (CJES) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 686.3% when compared to the same quarter one year ago, falling from $11.11 million to -$65.12 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, C&J ENERGY SERVICES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for C&J ENERGY SERVICES LTD is currently extremely low, coming in at 14.03%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.73% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 84.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 380.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • C&J ENERGY SERVICES LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, C&J ENERGY SERVICES LTD increased its bottom line by earning $1.23 versus $1.21 in the prior year. For the next year, the market is expecting a contraction of 251.2% in earnings (-$1.86 versus $1.23).
  • You can view the full analysis from the report here: CJES