Why Stone Energy Corp (SGY) Stock Is Up Today

NEW YORK (TheStreet) -- Stone Energy Corp (SGY) shares are up 11.5% to $49.83 on Tuesday after the company announced drilling success at the deep water Cardona South oil well in the Gulf of Mexico. 

Stone Energy has a 65% interest in the well.

"The success of the Cardona South well and the previously announced Cardona well allows us to move forward with our accelerated development program. We expect to begin production early in 2015, less than one year after spudding the first Cardona well, and we expect volumes from these two wells to more than double our deep water oil production," said CEO David H. Welch.

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TheStreet Ratings team rates STONE ENERGY CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate STONE ENERGY CORP (SGY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

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

  • Compared to its closing price of one year ago, SGY's share price has jumped by 138.43%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SGY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $154.70 million or 13.88% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.86%.
  • The gross profit margin for STONE ENERGY CORP is currently very high, coming in at 71.06%. Regardless of SGY'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 0.73% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, SGY's quick ratio is somewhat strong at 1.38, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: SGY Ratings Report
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