Energy XXI (EXXI) In A Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Energy XXI ( EXXI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Energy XXI as such a stock due to the following factors:

  • EXXI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.1 million.
  • EXXI has traded 134,963 shares today.
  • EXXI is down 3.3% today.
  • EXXI was up 10.5% yesterday.

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More details on EXXI:

Energy XXI (Bermuda) Limited is engaged in the acquisition, exploration, development, production, and operation of oil and natural gas properties onshore in Louisiana and Texas, and on the Gulf of Mexico. The stock currently has a dividend yield of 14%. EXXI has a PE ratio of 114.3. Currently there are 4 analysts that rate Energy XXI a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Energy XXI has been 7.9 million shares per day over the past 30 days. Energy XXI has a market cap of $322.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.64 and a short float of 19.9% with 1.65 days to cover. Shares are down 87.3% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energy XXI as a sell. 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.

Highlights from the ratings report include:
  • 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 LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • ENERGY XXI LTD 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 LTD reported lower earnings of $0.61 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 121.3% in earnings (-$0.13 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 LTD 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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