For the first quarter Halcon reported earnings of 3 cents a share, beating the Capital IQ Consensus Estimate of 2 cents a share by 1 cent. Revenue grew 44.3% year-over-year to $275.1 million for the quarter. Analysts expected revenue of $256.14 for the quarter.
"First quarter results exceeded expectations," chairman and CEO Floyd C. Wilson said in a press release. "Our persistent focus on improving returns via technological innovation and good old fashioned hard work is beginning to pay off. We are firing on all cylinders from an operational standpoint and are excited about the opportunities that lie ahead."
TheStreet Ratings team rates HALCON RESOURCES CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) 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, generally high debt management risk, disappointing return on equity, weak operating cash flow 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 5003.7% when compared to the same quarter one year ago, falling from -$8.04 million to -$410.39 million.
- The debt-to-equity ratio is very high at 2.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash 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, HALCON RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $102.32 million or 2.18% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HALCON RESOURCES CORP has marginally lower results.
- The share price of HALCON RESOURCES CORP has not done very well: it is down 13.76% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: HK Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.