Why Ion Geophysical (IO) Is Soaring Today

NEW YORK (TheStreet) -- Ion Geophysical  (IO) was rising 26.03% to $3.97 on Thursday after the seismic solutions company reported fourth-quarter earnings that surpassed analysts' expectations.

Ion disappointed investors earlier in 2013 but comfortably beat analysts' estimates in the fourth quarter with a profit of $19.8 million, or 12 cents a share, down from $27.2 million, or 17 cents a share, in the same period one year ago. Adjusted profit, excluding items, was 33 cents a share. Revenue also spiked 26% to $218.7 million. This well surpassed the expectations of a six-cent profit on revenue of $127 million from analysts' polled by Thomson Reuters.

The revenue growth stemmed from increased demand for Ion services. The company particularly grew in areas offshore of Africa, the Gulf of Mexico and India.

"We are pleased with the results we delivered in the fourth quarter. The first nine months of the year were challenging, as the first two quarters were impacted by cost overruns on a 3D marine program, and during the third quarter we experienced cautious spending by our E&P customers," said President and CEO Brian Hanson in the company's statement. "However, our customers saw value in our library as our Solutions segment had a record quarter for data library sales, up 131% over fourth quarter 2012...Also, a significant portion of our fourth quarter data library sales were to new customers, a further testament to the value of our data library portfolio."

Must Read: ION Receives 2014 Spotlight On Arctic Technology Award

TheStreet Ratings team rates ION GEOPHYSICAL CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ION GEOPHYSICAL CORP (IO) a SELL. This is driven by a number of negative factors, 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, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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 Energy Equipment & Services industry. The net income has significantly decreased by 1394.7% when compared to the same quarter one year ago, falling from $15.20 million to -$196.76 million.
  • 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 Energy Equipment & Services industry and the overall market, ION GEOPHYSICAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 59.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1533.33% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • ION GEOPHYSICAL CORP has experienced 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, ION GEOPHYSICAL CORP increased its bottom line by earning $0.39 versus $0.16 in the prior year. For the next year, the market is expecting a contraction of 120.5% in earnings (-$0.08 versus $0.39).
  • The revenue fell significantly faster than the industry average of 8.1%. Since the same quarter one year prior, revenues fell by 41.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: IO Ratings Report

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