Why Miller Energy Resources (MILL) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of Miller Energy Resources Inc. (MILL) are up 1.45% to $5.59 in mid-afternoon trading today after the company announced it's selling its Tennessee assets as part of an internal restructuring program and a plan to save between $3 million and $5 million per year.

Assets the independent exploration and production company would be divesting in Tennessee includes more than 46,000 lease acres, three horizontal Mississippi lime wells, and over 25 identified horizontal drilling targets. Miller's Tennessee operations produce approximately 248 boed.  

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Separately, TheStreet Ratings team rates MILLER ENERGY RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MILLER ENERGY RESOURCES INC (MILL) a SELL. This is driven by multiple 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 feeble growth in its earnings per share and disappointing return on equity."

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

  • MILLER ENERGY RESOURCES INC's earnings per share declined by 7.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MILLER ENERGY RESOURCES INC reported poor results of -$0.60 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 10.0% in earnings (-$0.66 versus -$0.60).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MILLER ENERGY RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with 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.
  • MILL's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that MILL's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for MILLER ENERGY RESOURCES INC is rather high; currently it is at 63.45%. 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 -18.65% is in-line with the industry average.
  • You can view the full analysis from the report here: MILL Ratings Report
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