NEW YORK (TheStreet) -- Shares of PetroQuest Energy Inc. (PQ) are up 1.20% to $7.59 after it announced on Monday it's entered into an oil focused joint venture with Midstates Petroleum Company (MPO) to drill two wells in Louisiana.
As part of the agreement, PetroQuest Energy has acquired a 50% interest in Midstates' Fleetwood project for an aggregate purchase price of $24 million.
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Separately, theStreet Ratings team rates PETROQUEST ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETROQUEST ENERGY INC (PQ) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PQ's very impressive revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues leaped by 66.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PETROQUEST ENERGY 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. This trend suggests that the performance of the business is improving. During the past fiscal year, PETROQUEST ENERGY INC turned its bottom line around by earning $0.15 versus -$2.20 in the prior year. This year, the market expects an improvement in earnings ($0.58 versus $0.15).
- 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 on the basis of return on equity, PETROQUEST ENERGY INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Powered by its strong earnings growth of 275.00% and other important driving factors, this stock has surged by 72.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The debt-to-equity ratio is very high at 3.94 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PQ has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: PQ Ratings Report