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"We rate KODIAK OIL & GAS CORP (KOG) 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 generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KOG's very impressive revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues leaped by 56.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KODIAK OIL & GAS 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, KODIAK OIL & GAS CORP increased its bottom line by earning $0.53 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.53).
- Net operating cash flow has declined marginally to $143.66 million or 5.87% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, KODIAK OIL & GAS CORP has marginally lower results.
- Currently the debt-to-equity ratio of 1.79 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, KOG maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: KOG Ratings Report