Why Synergy Resources (SYRG) Stock Is Surging Today

NEW YORK (TheStreet) -- Synergy Resources  (SYRG) surged Monday after Stifel Nicolaus upgraded the stock to "buy" from "hold" and maintained its $13 price target.

The firm cited the company's strong performance and noted Synergy's Middle Core wells have outperformed expectations. Stifel also said Synergy has pulled back more than 21% in the last month, compared to a 13% average pullback in peer stocks.

Stifel expects 109% year-over-year production growth in 2015; however, the firm cautioned a Nov. 2014 vote to put tighter regulations on Colorado's oil and gas production has weighed on the stock.

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The stock was up 16.07% to $11.95 at 2:11 p.m. More than 1.4 million shares compared to the average volume of 838,048.

Separately, TheStreet Ratings team rates SYNERGY RESOURCES CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNERGY RESOURCES CORP (SYRG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • SYRG's very impressive revenue growth greatly exceeded the industry average of 1.5%. Since the same quarter one year prior, revenues leaped by 108.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SYRG's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 98.1% when compared to the same quarter one year prior, rising from $3.62 million to $7.16 million.
  • Net operating cash flow has increased to $13.39 million or 26.71% when compared to the same quarter last year. In addition, SYNERGY RESOURCES CORP has also modestly surpassed the industry average cash flow growth rate of 18.80%.
  • The gross profit margin for SYNERGY RESOURCES CORP is currently very high, coming in at 81.77%. Regardless of SYRG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SYRG's net profit margin of 27.89% significantly outperformed against the industry.
  • You can view the full analysis from the report here: SYRG 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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