NEW YORK (TheStreet) -- Shares of Halcon Resources (HK) were up 1.54% to $3.29 in morning trading on Monday ahead of the energy company's scheduled third-quarter earnings report after the market close. Here's what analysts are expecting.
The consensus estimate calls for Halcon to report earnings of 6 cents a share on revenue of $317.69 million. In the third quarter last year, the company posted earnings of 4 cents a share, which came up short of the estimate of 6 cents a share from analysts polled by Thomson Reuters. But revenue totaled $305.01 million, which easily beat analysts' expectations of $267.98 million.
In the second quarter 2014, Halcon reported earnings of 7 cents a share to beat the consensus estimate of 4 cents a share. Revenue totaled $327.14 million, which handily surpassed analysts' expectations of $304.49 million.
Separately, TheStreet Ratings team rates HALCON RESOURCES CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) 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 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:
- HK's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 51.6%. 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 $251.44 million or 44.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.53%.
- The gross profit margin for HALCON RESOURCES CORP is currently very high, coming in at 76.95%. 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 -20.83% is in-line with the industry average.
- The debt-to-equity ratio is very high at 2.61 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, HK has a quick ratio of 0.66, 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, HALCON RESOURCES 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: HK Ratings Report