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 (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity, generally high debt management risk and feeble growth in its earnings per share.
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Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 106.77% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, REN is still more expensive than most of the other companies in its industry.
- 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 106.6% when compared to the same quarter one year ago, falling from $37.57 million to -$2.48 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, RESOLUTE ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that REN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.59 is low and demonstrates weak liquidity.
- RESOLUTE ENERGY CORP 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 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, RESOLUTE ENERGY CORP increased its bottom line by earning $0.37 versus $0.12 in the prior year. For the next year, the market is expecting a contraction of 75.7% in earnings ($0.09 versus $0.37).
Resolute Energy Corporation, an independent oil and gas company, engages in the acquisition, exploration, exploitation, and development of oil and gas properties in the United States. The company has a P/E ratio of 93.6, above the S&P 500 P/E ratio of 17.7. Resolute Energy has a market cap of $521.7 million and is part of the basic materials sector and energy industry. Shares are down 22% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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