Why Magellan Petroleum (MPET) Stock Is Up Today

NEW YORK (TheStreet) -- Magellan Petroleum (MPET) was gaining 7.8% to $1.80 Tuesday after announcing plans for two wells in the U.K. in 2014.

The company has plans for two exploration wells to be drilled in 2014 in its license areas in the U.K. Magellan's partner Angus Energy will spud in July 2014 a exploration well on the Horse Hill prospect, Angus will carry all of the costs for the well. Magellan will retain a 35% working interest in the well.

Magellan will fund a 50% share of a well drilled by partner Celtique Energie at Broadford Bridge later in 2014.

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TheStreet Ratings team rates MAGELLAN PETROLEUM CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate MAGELLAN PETROLEUM CORP (MPET) a SELL. This is driven by some concerns, 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 poor profit margins."

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, MAGELLAN PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MAGELLAN PETROLEUM CORP is currently extremely low, coming in at 8.13%. Regardless of MPET's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MPET's net profit margin of -219.89% significantly underperformed when compared to the industry average.
  • MAGELLAN PETROLEUM CORP has improved earnings per share by 28.6% 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, MAGELLAN PETROLEUM CORP swung to a loss, reporting -$0.41 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus -$0.41).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 43.5% when compared to the same quarter one year prior, rising from -$7.28 million to -$4.11 million.
  • This stock has increased by 58.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MPET do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: MPET 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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