NEW YORK (TheStreet) -- Sanchez Energy (SN) was falling 7.6% to $29.53 Tuesday after the energy company said at a conference that is expects to produce between 18,000 and 20,000 barrels of oil equivalent per day (Boe/d) in the first quarter.
The production estimates aren't much higher than the company's fourth quarter production of 18,810 Boe/d.
Sanchez previously said it expected to produce between 21,000 and 23,000 Boe/d in 2014, which it reiterated at the conference. The company also reiterated its expected yearly capital expenditures of between $650 million and $700 million for 2014.
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TheStreet Ratings team rates SANCHEZ ENERGY CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANCHEZ ENERGY CORP (SN) a SELL. This is driven by a few notable weaknesses, 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. Among the areas we feel are negative, one of the most important has been the company's poor growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SANCHEZ ENERGY 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SANCHEZ ENERGY CORP swung to a loss, reporting -$0.55 versus $0.02 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus -$0.55).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANCHEZ ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for SANCHEZ ENERGY CORP is currently very high, coming in at 82.42%. Regardless of SN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.11% trails the industry average.
- SN's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.46 is very high and demonstrates very strong liquidity.
- Compared to its closing price of one year ago, SN's share price has jumped by 59.71%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in SN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: SN Ratings Report