NEW YORK (TheStreet) -- I don't normally troll for ideas in single-digit names, but I made an exception for EXCO Resources (XCO) because I saw a report of insider buying. Insider buying in the open market is one of the better long-term bottom indicators.
In this chart of XCO, above, we can see that the On-Balance-Volume line turned up in August and prices have rallied above the 20-day and 50-day moving averages. No need to look at a longer-term chart as this is a speculative play. Either XCO rallies from here or not. A small pop can be a big percentage move. For now, this is not a long-term idea.
TheStreet Ratings team rates EXCO RESOURCES INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:
We rate EXCO RESOURCES INC (XCO) a SELL. This is based on the combination of unfavorable investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 952.8% when compared to the same quarter one year ago, falling from $41.57 million to -$354.52 million.
- Net operating cash flow has significantly decreased to $18.65 million or 79.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.26%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 966.66% 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.
- EXCO RESOURCES INC 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXCO RESOURCES INC increased its bottom line by earning $0.44 versus $0.11 in the prior year. For the next year, the market is expecting a contraction of 165.9% in earnings (-$0.29 versus $0.44).
- XCO, with its decline in revenue, slightly underperformed the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 44.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: XCO