NEW YORK (TheStreet) -- Diamondback Energy (FANG) shares are down -1% to $87.15 in pre-market trading today after the company announced the pricing of an underwritten public offering of 5 million shares for $87 per share.
Net proceeds from the offering are expected to range between $421.7 million and $484.9 million if the underwriters exercise their full 750,000 share option.
TheStreet Ratings team rates DIAMONDBACK ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIAMONDBACK ENERGY INC (FANG) 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's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FANG's very impressive revenue growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues leaped by 239.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DIAMONDBACK 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIAMONDBACK ENERGY INC turned its bottom line around by earning $1.26 versus -$1.04 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $1.26).
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that FANG's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DIAMONDBACK ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Powered by its strong earnings growth of 220.00% and other important driving factors, this stock has surged by 124.93% 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.
- You can view the full analysis from the report here: FANG Ratings Report