NEW YORK (TheStreet) -- Shares of Comstock Resources(CRK) - Get Report were falling 14.7% to $2.27 on heavy trading volume Thursday, continuing losses from Wednesday when the oil company announces it will divest its properties in Burleson County, Texas.
About 3.1 million shares of Comstock Resources were traded by 10:40 a.m. Thursday, above the company's average trading volume of about 2.2 million shares a day.
Comstock Resources said it entered into a definitive purchase agreement to sell its oil and gas properties in the county for about $115 million. The company said it plans to use the proceeds from the sale to fund its 2015 drilling program, to enhance its liquidity, and for general corporate purposes.
The company said the company are currently producing about 1,900 barrels of oil and 5.5 million cubic feet of natural gas a day.
The deal is expected to close in July 2015 with an effective date of May 1, 2015.
TheStreet Ratings team rates COMSTOCK RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate COMSTOCK RESOURCES INC (CRK) 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, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."
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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 6838.4% when compared to the same quarter one year ago, falling from $1.17 million to -$78.50 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 Oil, Gas & Consumable Fuels industry and the overall market, COMSTOCK RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Currently the debt-to-equity ratio of 1.76 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, CRK has managed to keep a strong quick ratio of 1.59, which demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has decreased to $60.86 million or 36.43% when compared to the same quarter last year. Despite a decrease in cash flow COMSTOCK RESOURCES INC is still fairing well by exceeding its industry average cash flow growth rate of -53.17%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 86.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 8650.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: CRK Ratings Report