Crosstex Energy (XTXI) In A Perilous Reversal

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.

Trade-Ideas LLC identified Crosstex Energy ( XTXI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Crosstex Energy as such a stock due to the following factors:

  • XTXI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.9 million.
  • XTXI has traded 130,867 shares today.
  • XTXI is down 4.9% today.
  • XTXI was up 71.5% yesterday.

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More details on XTXI:

Crosstex Energy, Inc., through its partnership interests in Crosstex Energy, L.P., engages in the gathering, transmission, processing, and marketing of natural gas and natural gas liquids (NGLs), and crude oil in the United States. The stock currently has a dividend yield of 2.3%. Currently there are no analysts that rate Crosstex Energy a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Crosstex Energy has been 166,300 shares per day over the past 30 days. Crosstex Energy has a market cap of $1.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.35 and a short float of 2.3% with 1.69 days to cover. Shares are up 47.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Crosstex Energy as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 15.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, XTXI's share price has jumped by 45.57%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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, CROSSTEX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CROSSTEX ENERGY INC is currently extremely low, coming in at 12.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.02% trails that of the industry average.

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