NEW YORK (TheStreet) -- Shares of FX Energy Inc. (FXEN) are up 17.59% to $3.81 on Tuesday on news that the company's Tuchola-4K well in Poland reached its objective, the lower Zechsten Ca 1 formation at 2,740 meters, with strong gas presence throughout.
Tuchola-4K is an appraisal well of the Tuchola-3K discovery made in 2013, the company said.
The company is evaluating 220 square kilometers of 3D seismic data in the surrounding area to identify the next drill site.
Based on this seismic work, the company expects to start drilling another well later this year.
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TheStreet Ratings team rates FX ENERGY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FX ENERGY INC (FXEN) 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. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Oil, Gas & Consumable Fuels industry and the overall market, FX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, FXEN has managed to keep a strong quick ratio of 2.04, which demonstrates the ability to cover short-term cash needs.
- FXEN, with its decline in revenue, slightly underperformed the industry average of 7.7%. Since the same quarter one year prior, revenues fell by 12.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
- FX ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FX ENERGY INC swung to a loss, reporting -$0.23 versus $0.08 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.23).
- You can view the full analysis from the report here: FXEN Ratings Report