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NEW YORK (TheStreet) -- Energy XXI (Bermuda) (EXXI) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENERGY XXI (BERMUDA) (EXXI) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk and disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 2.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash 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, ENERGY XXI (BERMUDA)'s return on equity significantly trails that of both the industry average and the S&P 500.
- 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 34.4% in earnings ($0.40 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 114.8% when compared to the same quarter one year ago, falling from $43.14 million to -$6.40 million.
- The gross profit margin for ENERGY XXI (BERMUDA) is rather high; currently it is at 62.41%. 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 -1.58% trails the industry average.
- You can view the full analysis from the report here: EXXI Ratings Report