NEW YORK (TheStreet) -- LinnCo (LNCO) shares are down $13.6% to $9.53 in early market trading on Monday as the oil and natural gas properties developer has continued to receive analyst downgrades in the weeks since its November earnings beat.
The company currently has an average rating of "hold" from eight different firms, according to AnalystsRatingsNetwork.
Falling oil prices are fueling the recent investor sell off with the stock falling 9.9% in trading during the last session, while it is currently down 61% year to date. Fears of low current quarter revenue due to multi-year lows in oil prices has hurt oil stocks in recent weeks.
Despite the downgraded, outlooks the company still has an average price target of $29.99, representing a potential upside of 214% from the stock's current price. LinnCo's 52-week low of $10.68 may be in jeopardy of falling today if the stock does not recover.
The company reported impressive quarterly earnings of $1.10 per share when it released its financial results on November 19. Analysts on average were expecting the company to earn 49 cents per share during the period.
TheStreet Ratings team rates LINNCO LLC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate LINNCO LLC (LNCO) a SELL. This is driven by some concerns, 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 disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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, LINNCO LLC's return on equity significantly trails that of both the industry average and the S&P 500.
- LNCO'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 61.47%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- LINNCO LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LINNCO LLC swung to a loss, reporting -$17.73 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus -$17.73).
- The gross profit margin for LINNCO LLC is currently very high, coming in at 100.00%. LNCO has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, LNCO's net profit margin of 68.29% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 267.62% to $92.69 million when compared to the same quarter last year. In addition, LINNCO LLC has also vastly surpassed the industry average cash flow growth rate of -1.58%.
- You can view the full analysis from the report here: LNCO Ratings Report