Rex Energy Corporation Stock Upgraded (REXX)

NEW YORK ( TheStreet) -- Rex Energy Corporation (Nasdaq: REXX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • REXX's very impressive revenue growth greatly exceeded the industry average of 11.8%. Since the same quarter one year prior, revenues leaped by 53.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 78.3% when compared to the same quarter one year prior, rising from -$7.50 million to -$1.63 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • REX ENERGY CORP 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, REX ENERGY CORP increased its bottom line by earning $0.41 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 41.5% in earnings ($0.24 versus $0.41).
  • The gross profit margin for REX ENERGY CORP is rather high; currently it is at 62.60%. Regardless of REXX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, REXX's net profit margin of -4.30% significantly underperformed when compared to the industry average.

Rex Energy Corporation operates as an independent oil and gas company in the Appalachian Basin and the Illinois Basin. It focuses on the Marcellus Shale drilling projects, and Utica Shale and Upper Devonian Shale exploration activities in the Appalachian Basin. The company has a P/E ratio of 21.1, above the S&P 500 P/E ratio of 17.7. Rex Energy has a market cap of $633.9 million and is part of the basic materials sector and energy industry. Shares are down 14.2% year to date as of the close of trading on Tuesday.

You can view the full Rex Energy Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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.
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