Why FX Energy (FXEN) Stock Is Down Today

NEW YORK (TheStreet) -- FX Energy (FXEN) was falling -18.8% to $3.90 Wednesday after reporting field gas volumes for its Tuchola field in Poland.

The company said dynamic flow test data for the field indicate 20 billion feet of cubic gas in place, though a pressure buildup near the end of the test could mean a higher figure. FX Energy estimates recoverable gas at about 60% to 65% of actual gas in place, and field production of 9 barrels per day of condensate.

The company is proceeding with its design and permit work to get the Tuchola field into production by the end of the 2016.

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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 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 weak operating cash flow and generally high debt management risk."

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

  • Net operating cash flow has declined marginally to $4.40 million or 2.17% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio of 1.12 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.51, which shows the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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 gross profit margin for FX ENERGY INC is currently very high, coming in at 86.51%. Regardless of FXEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FXEN's net profit margin of -10.11% significantly underperformed when compared to the industry average.
  • 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. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • You can view the full analysis from the report here: FXEN 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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