WPX Energy (WPX) Stock Drops After Pricing Secondary Offering

NEW YORK (TheStreet) -- WPX Energy (WPX) shares are down 4.64% to $9.86 in afternoon trading on Friday after the company announced the pricing for an up-sized offering of 30 million common shares today.

The company will offer the public 30 million shares at a price of $10.10 per share with underwriters being granted the option to purchase an additional 4.5 million shares.

The offering was up-sized from the company's previous plan to sell 27 million shares.

The offering is expected to close July 22.

Separately, falling crude prices are also putting pressure on the company's stock today.

A global supply glut continues to be responsible for falling oil prices which have more than halved over the past 12 months.

Brent crude for August delivery is down 0.54% to $56.61 per barrel while West Texas crude for August delivery is also down 1.18% to $50.31 a barrel.

TheStreet Ratings team rates WPX ENERGY INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WPX ENERGY INC (WPX) 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 compelling growth in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 272.2% when compared to the same quarter one year prior, rising from $18.00 million to $67.00 million.
  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that WPX's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
  • 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, WPX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $194.00 million or 5.82% when compared to the same quarter last year. Despite a decrease in cash flow WPX ENERGY INC is still fairing well by exceeding its industry average cash flow growth rate of -53.30%.
  • You can view the full analysis from the report here: WPX Ratings Report

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