Pioneer Natural Resources (PXD) Stock Is Down After Company Prices Public Offering

NEW YORK (TheStreet) -- Shares of Pioneer Natural Resources (PXD) were falling 5% to $171.90 Wednesday after the oil and gas company priced its public offering of 5.75 million shares of common stock.

Pioneer Natural Resources priced its 5.75 million for proceeds of about $1 billion. The company said it expects to use the net proceeds from the offering to continuing developing its position in the Spraberry/Wolfcamp play in West Texas, and the construction of front-end loaded infrastructure.

Citigroup and Bank of America/Merrill Lynch are acting as joint book-running managers for the offering. The offering is expected to close on or close to Nov. 10.

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TheStreet Ratings team rates PIONEER NATURAL RESOURCES CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate PIONEER NATURAL RESOURCES CO (PXD) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

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

  • The revenue growth greatly exceeded the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 39.2%. 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.
  • Net operating cash flow has increased to $717.00 million or 24.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.46%.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that PXD's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
  • 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 99.7% when compared to the same quarter one year ago, falling from $336.00 million to $1.00 million.
  • 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, PIONEER NATURAL RESOURCES CO'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: PXD Ratings Report

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