Sanchez Energy (SN) Stock Tanks to One-Year Low as Oil Prices Sink to Five-Year Low

NEW YORK (TheStreet) -- Shares of oil and natural gas exploration and production company Sanchez Energy  (SN) plummeted more than 17% to a 52-week low of $9.34 on Monday as oil prices sank to a five-year low.

Brent crude declined to $67.53 a barrel on Monday, its lowest price since October 2009, according to BBC News. U.S. crude dropped 50 cents to $65.65 a barrel and hit an intraday low of $63.72, the lowest price since July 2009.

Brent crude rallied 2.77% to $72.09 in early afternoon trading.

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OPEC decided last week not to cut oil production and to keep its target at 30 million barrels per day, a move that could leave the market oversupplied. The announcement sent oil prices spiraling downward, a trend that continued into Monday.

More than 4.4 million shares had changed hands as of 12:50 p.m., compared to the daily average volume of 2,075,240.

Separately, TheStreet Ratings team rates SANCHEZ ENERGY CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SANCHEZ ENERGY CORP (SN) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk."

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

  • SN's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 120.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SANCHEZ ENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SANCHEZ ENERGY CORP turned its bottom line around by earning $0.18 versus -$0.55 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus $0.18).
  • The gross profit margin for SANCHEZ ENERGY CORP is currently very high, coming in at 78.15%. Regardless of SN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SN's net profit margin of 23.64% significantly outperformed against the industry.
  • Currently the debt-to-equity ratio of 1.62 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.16, which shows the ability to cover short-term cash needs.
  • SN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.70%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • You can view the full analysis from the report here: SN Ratings Report

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