Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
-- Energy XXI
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- The gross profit margin for ENERGY XXI (BERMUDA) is currently very high, coming in at 70.70%. Regardless of EXXI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EXXI's net profit margin of 12.89% compares favorably to the industry average.
- ENERGY XXI (BERMUDA) has exprienced 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 not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENERGY XXI (BERMUDA) increased its bottom line by earning $3.84 versus $0.34 in the prior year.
- Net operating cash flow has decreased to $139.47 million or 27.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 57.4% when compared to the same quarter one year ago, falling from $97.09 million to $41.33 million.
Energy XXI (Bermuda) Limited, together with its subsidiaries, engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. The company has a P/E ratio of 8.8, below the S&P 500 P/E ratio of 17.7. Energy XXI has a market cap of $2.36 billion and is part of the basic materials sector and energy industry. Shares are down 12% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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