EXCO Resources shares have changed hands 5.9 million times in trading today, ahead of the stock's three month daily average of 4.3 million shares.
WTI crude for February delivery is down 5.35% to $49.87 today, while Brent crude for February delivery is also down, 6.2% to $52.93.
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Oil prices have been declining since November when officials at OPEC said that they would maintain current production levels despite a glut of oil already on the market in an effort to maintain its market share in the face of increased competition from U.S. produced shale oil.
Data today additionally shows Russian oil output at post-Soviet era highs while exports from Iraq have increased to their highest levels since 1980, according to Reuters.
TheStreet Ratings team rates EXCO RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXCO RESOURCES INC (XCO) 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 generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 3.63 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, XCO has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- XCO'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 59.14%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EXCO RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- EXCO RESOURCES INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EXCO RESOURCES INC turned its bottom line around by earning $0.11 versus -$6.51 in the prior year. For the next year, the market is expecting a contraction of 27.3% in earnings ($0.08 versus $0.11).
- XCO, with its decline in revenue, slightly underperformed the industry average of 6.7%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: XCO Ratings Report