NEW YORK (TheStreet) -- Shares of Penn Virginia (PVA) are up by 18.54% to 97 cents per share on heavy volume Wednesday, after the oil and gas company announced the sale of certain non-core assets in South Texas for $13 million.
The assets are located in Gonzales County, TX, a significant distance from the company's main acreage block.
Penn Virginia's divestiture includes three wells that as of last month produce approximately 250 barrels of oil equivalent per day.
Following the sale, the company will still hold interest in 100,400 net acres in South Texas.
Traders have exchanged 7.5 million shares of Penn Virginia so far today versus the stock's daily moving average of 4 million shares per day.
Separately, TheStreet Ratings team rates PENN VIRGINIA CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate PENN VIRGINIA CORP (PVA) a SELL. This is driven by a few notable weaknesses, 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 generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.40 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PVA has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENN VIRGINIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- PVA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 96.21%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- PVA, with its decline in revenue, slightly underperformed the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 40.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for PENN VIRGINIA CORP is currently very high, coming in at 73.36%. Regardless of PVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PVA's net profit margin of -95.90% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: PVA