Why Northern Oil & Gas (NOG) Is Falling Today

NEW YORK (TheStreet) -- Northern Oil & Gas (NOG) was falling 9.3% to $13.92 Friday after missing analysts' earnings estimates for the fourth quarter.

For the fourth quarter the oil and gas company reported earnings of 22 cents a share, missing analysts' estimates of 27 cents a share by 5 cents. Revenue increased 24.6% from the year-ago quarter to $101.9 million. Analysts expected revenue of $98.5 million in revenue for the quarter.

"Northern experienced robust production growth in the second half of 2013, growing production 25% over the first half of 2013," chairman and CEO Michael Reger said in a statement. "We finished 2013 with solid momentum as fourth quarter production grew 28% year-over-year."

Must read: NOG Crosses Below Key Moving Average Level

TheStreet Ratings team rates NORTHERN OIL & GAS INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORTHERN OIL & GAS INC (NOG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year and increase in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • This stock has managed to rise its share value by 12.78% over the past twelve months. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The gross profit margin for NORTHERN OIL & GAS INC is rather high; currently it is at 69.33%. Regardless of NOG'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 2.44% trails the industry average.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORTHERN OIL & GAS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • NOG's debt-to-equity ratio of 0.92 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. Despite the fact that NOG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.56 is low and demonstrates weak liquidity.

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