Why Bill Barrett (BBG) Stock Is Up Today

NEW YORK (TheStreet) -- Bill Barrett (BBG) was gaining 8.2% to $23.04 Tuesday after announcing a divestiture of Powder River and Piceance Basin properties, and the acquisition of more acreage in Northeast Wattenburg.

The Denver-based oil and gas company said it signed purchase and sale agreements with undisclosed purchasers to sell most of its Powder River Basin acreage and all of its position in the Gibson Gulch natural gas program in Piceance Basin. The total value of the transactions is $757 million.

In addition to the transactions, Bill Barrett revised its full-year 2014 operating guidance. The company now expects total production of 9.4 million to 9.8 million barrels of oil equivalent for 2014, reducing its previous guidance by about 1.4 million barrels of oil equivalent as a result of the sold assets.

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TheStreet Ratings team rates BILL BARRETT CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BILL BARRETT CORP (BBG) 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 revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

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

  • BBG's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 2.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for BILL BARRETT CORP is currently very high, coming in at 74.26%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.33% is in-line with the industry average.
  • BILL BARRETT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BILL BARRETT CORP swung to a loss, reporting -$4.06 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$4.06).
  • The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, BBG has a quick ratio of 0.62, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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, BILL BARRETT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: BBG Ratings Report

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