NEW YORK (TheStreet) -- Shares of Gulf Resources (GURE - Get Report) are soaring, up 93.24% to $2.30 today on heavy trading volume, after the company announced it has found natural gas resources under its bromine well in the Sichuan province of China.
The Weifang, China-based manufacturer of bromine, crude salt, and specialty chemical products said that in September 2014, its team started deeper drilling exploration under its existing well and did exploration analysis on the resources from different levels, which led to the discovery of the natural gas.
"We will hire a third party to conduct a survey of the geological structure, complexity analysis and economics of the natural gas under this well. However, given the success of the Chinese National Petroleum Corporation in the same region, we are optimistic about this opportunity," Gulf Resources CEO Xiaobin Liu said.
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"We are very excited about this new finding. The discovery of natural gas in our drilling area might bring Gulf into a business segment with exceptional opportunities in terms of both sales and profits," Liu added.
About 14.48 million shares changed hands by 11:11 a.m. in New York, compared to the average of 127,064 shares.
Separately, TheStreet Ratings team rates GULF RESOURCES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GULF RESOURCES INC (GURE) 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 largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GURE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 16.25, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for GULF RESOURCES INC is rather high; currently it is at 50.53%. Regardless of GURE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GURE's net profit margin of 16.19% compares favorably to the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.73%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.09% compared to the year-earlier 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, 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 Chemicals industry. The net income has significantly decreased by 37.9% when compared to the same quarter one year ago, falling from $8.11 million to $5.04 million.
- You can view the full analysis from the report here: GURE Ratings Report