NEW YORK (TheStreet) -- Shares of Continental Resources (CLR) - Get Report rose 5.15% to $47.99 in afternoon trading Wednesday after the oil and natural gas producer reported fourth-quarter earnings that beat analysts' expectations thanks to a one-time gain from hedge sales.
Continental reported adjusted earnings of $1.14 a share, more than double the 55 cents a share expected by analysts polled by Thomson Reuters.
The second-largest oil producer in North Dakota's Bakken shale formation made a surprising move in November when it sold all of its oil and gas hedges as part of an expectation that oil prices would rebound. To this point, oil prices have yet to significantly rally for any sustained period of time.
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Regardless, the sale gave Continental a one-time $388 million pre-tax gain in the fourth quarter, though this did not totally offset the severe drop in crude oil and natural gas prices that has been occurring since June.
Average daily production spiked 34% year-over-year to 193,456 barrels of oil equivalent, but the average sale price dropped 25%.
Continental announced earlier this month that its reserves, a metric that helps measure growth potential, increased 20% last year to 1.35 billion barrels of oil equivalent.
Separately, TheStreet Ratings team rates CONTINENTAL RESOURCES INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONTINENTAL RESOURCES INC (CLR) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CLR's very impressive revenue growth greatly exceeded the industry average of 20.1%. Since the same quarter one year prior, revenues leaped by 101.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CONTINENTAL RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CONTINENTAL RESOURCES INC increased its bottom line by earning $2.07 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.07).
- CLR has underperformed the S&P 500 Index, declining 17.86% from its price level of one year ago. 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.
- The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CLR maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: CLR Ratings Report