Energy XXI (Bermuda) (EXXI) Stock Declines as Oil Prices Hit Four-Year Low

NEW YORK (TheStreet) -- Shares of Energy XXI (Bermuda)  (EXXI) sank 8.16% to $6.64 in afternoon trading Tuesday after oil prices declined to a four-year low.

Brent crude oil prices for December delivery fell 3% to $82.19 a barrel on London's ICE exchange. Brent last hit this price in October 2010, according to MarketWatch.

Saudi Arabia chose Tuesday to change oil prices sold to U.S. and Asian buyers due to weak forecast for European growth. The Middle Eastern nation reduced prices for the U.S. and increased prices for large buyers such as China. Saudi Arabia is trying to stay competitive amid slumping oil prices, and the move further drove prices down Tuesday.

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Separately, TheStreet Ratings team rates ENERGY XXI (BERMUDA) as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENERGY XXI (BERMUDA) (EXXI) 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

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

  • EXXI's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 3.1%. 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 ENERGY XXI (BERMUDA) is rather high; currently it is at 66.19%. Regardless of EXXI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.55% trails the industry average.
  • ENERGY XXI (BERMUDA) 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ENERGY XXI (BERMUDA) reported lower earnings of $0.61 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 10.7% in earnings ($0.55 versus $0.61).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 102.9% when compared to the same quarter one year ago, falling from $62.05 million to -$1.82 million.
  • You can view the full analysis from the report here: EXXI Ratings Report

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