Why BPZ Resources (BPZ) Stock Is Surging Today

NEW YORK (TheStreet) -- BPZ Resources  (BPZ) surged Monday after Wunderlich increased its price target on the stock to $7 from $6.

The firm noted the the company's cost structure is improving faster than expected. Wunderlich maintained its "buy" rating after the company's first-quarter results last week. BPZ reported a loss of 3 cents a share compared to the consensus estimate of a loss of 6 cents a share. It also posted revenue of $21 million compared to the consensus estimate of $21.84 million.

The stock was up 10.81% to $2.87 at 3:38 p.m.

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Separately, TheStreet Ratings team rates BPZ RESOURCES INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate BPZ RESOURCES INC (BPZ) a SELL. This is driven by several 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 generally high debt management risk and disappointing return on equity."

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

  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, BPZ maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.
  • 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, BPZ RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • BPZ RESOURCES 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, BPZ RESOURCES INC reported poor results of -$0.50 versus -$0.34 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$0.50).
  • The gross profit margin for BPZ RESOURCES INC is currently very high, coming in at 75.10%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -17.01% is in-line with the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 72.1% when compared to the same quarter one year prior, rising from -$12.78 million to -$3.57 million.
  • You can view the full analysis from the report here: BPZ Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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