Strong Upward Pre-Market Activity For Concho Resources (CXO)

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.

Trade-Ideas LLC identified Concho Resources ( CXO) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Concho Resources as such a stock due to the following factors:

  • CXO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $151.3 million.
  • CXO traded 13,156 shares today in the pre-market hours as of 9:30 AM.
  • CXO is up 5.8% today from Friday's close.

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More details on CXO:

Concho Resources Inc., an independent oil and natural gas company, acquires, develops, and explores for oil and natural gas properties in the Unites States. The company's principal operating areas are located in the Permian Basin of southeast New Mexico and West Texas. CXO has a PE ratio of 25.9. Currently there are 15 analysts that rate Concho Resources a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Concho Resources has been 1.5 million shares per day over the past 30 days. Concho has a market cap of $15.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.11 and a short float of 6.3% with 5.41 days to cover. Shares are up 24.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Concho Resources as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 22.8% when compared to the same quarter one year prior, going from $105.79 million to $129.90 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.46 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Despite the weak revenue results, CXO has outperformed against the industry average of 33.1%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • In its most recent trading session, CXO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The gross profit margin for CONCHO RESOURCES INC is currently extremely low, coming in at 4.50%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 21.85% has significantly outperformed against the industry average.

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