Energy XXI (EXXI) Is Today's Dead Cat Bounce Stock

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 Energy XXI ( EXXI) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Energy XXI as such a stock due to the following factors:

  • EXXI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.2 million.
  • EXXI has traded 209,043 shares today.
  • EXXI is up 3.6% today.
  • EXXI was down 7.8% yesterday.

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More details on EXXI:

Energy XXI (Bermuda) Limited is engaged in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and offshore in the Gulf of Mexico. The stock currently has a dividend yield of 2%. EXXI has a PE ratio of 2.6. Currently there are 9 analysts that rate Energy XXI a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Energy XXI has been 1.7 million shares per day over the past 30 days. Energy XXI has a market cap of $1.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.26 and a short float of 13.5% with 3.28 days to cover. Shares are down 12.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energy XXI as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and expanding profit margins. 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 disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $153.80 million or 10.27% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.43%.
  • The gross profit margin for ENERGY XXI (BERMUDA) is rather high; currently it is at 64.06%. Regardless of EXXI'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 3.53% trails the industry average.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 74.6% when compared to the same quarter one year ago, falling from $41.33 million to $10.50 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY XXI (BERMUDA)'s return on equity is significantly below that of the industry average and is below that of the S&P 500.

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