Why Exterran Holdings (EXH) Stock Is Up Today

NEW YORK (TheStreet) -- Exterran Holdings (EXH) was gaining 7.9% to $45.29 Tuesday after beating analysts' estimates for earnings in the first quarter.

For the first quarter Exterran reported earnings of 18 cents a share, 5 cents above the Capital IQ Consensus Estimate of 13 cents a share. Revenue fell -20.8% from the year-ago quarter to $643 million. Analysts expected revenue of $680.99 million for the quarter.

The company said fabrication backlog as of March 31, 2014 was $669.1 million, compares to $679.9 million as of December 31, 2013, and $994 million as of March 31, 2013.

"First quarter highlights included continued solid performance in all of our business segments and improved profitability in our fabrication operations, which reflect sustained improvement from our performance improvement initiatives," president and CEO Brad Childers said. "We are pleased by recent awards of significant new contract operations projects in Latin America and Exterran Partners' April 2014 acquisition of compression assets from MidCon Compression L.L.C."

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TheStreet Ratings team rates EXTERRAN HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXTERRAN HOLDINGS INC (EXH) 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 impressive record of earnings per share growth, compelling growth in net income, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • EXTERRAN HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EXTERRAN HOLDINGS INC turned its bottom line around by earning $0.89 versus -$1.68 in the prior year. This year, the market expects an improvement in earnings ($1.05 versus $0.89).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 494.6% when compared to the same quarter one year prior, rising from -$5.74 million to $22.65 million.
  • Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 63.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • EXH, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • EXH's debt-to-equity ratio of 0.90 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.80 is weak.
  • You can view the full analysis from the report here: EXH Ratings Report

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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.

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