The single, easiest way to keep track of all the stocks that matter... With SandRidge Energy (NYSE: SD ) planning to raise nearly $721 million through a royalty offering, investors' expectations are running high on the stock. As a result of the news, shares gained as much as 12% in intraday trading Thursday. Earnings down, debts up From a balance sheet perspective, the company is heavily in debt, which is definitely a matter of concern. A debt-to-equity ratio of 256.8% is undoubtedly huge. Compare that with peers such as Cabot Oil & Gas (NYSE: COG ) at 55.9%,Ultra Petroleum (NYSE: UPL ) at 135.9%, and QEP Resources (NYSE: QEP ) at 51.7%. This makes the drop in earnings all the more worrisome for the Foolish investor. How pricey is this stock? Foolish bottom lineSandRidge Looks Too Uncertain for Investment
May 31, 2011 | Comments (0)Watch stocks you care about
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Oklahoma-based SandRidge has been showing encouraging results of late, though its bottom line is still in the red. Revenues have gone up. Losses have been reduced. But that does not prove a thing -- yet. Income from operations, before adjusting for noncash expenses (i.e., EBITDA) saw a dismal drop in the last 12 months. EBITDA margins were at their lowest in the last five years -- a dismal 8%.
Relatively speaking, the stock isn't pushing the discount that it needs to in order to account for the lousy financials we're seeing underneath. SandRidge's TEV/EBITDA currently stands at 22.9 times. This is expensive when compared to the likes of Cabot at 12.2, Ultra at 8.8, and QEP Resources at 7.1.
While a royalty offering like the one the company has just announced will definitely put some much needed cash in the company's coffers, we're still looking at a company that is not functioning at a high level operationally. In the long run, SandRidge has to prove its worth by generating solid profits from operations. Until then, Fools should wait before making any move.
Time to buy SD? Still Uncertain
所有跟帖:
• I think I am one of the foolish investors -caren- ♀ (0 bytes) () 05/31/2011 postreply 19:36:27
• I decided to wait a little -caren- ♀ (0 bytes) () 05/31/2011 postreply 19:38:57
• It depends on your entry -rx300- ♂ (672 bytes) () 05/31/2011 postreply 19:53:38
• I actually work in oil industry in Texas.... -caren- ♀ (0 bytes) () 05/31/2011 postreply 19:59:37
• then you could freely share your opinion -rx300- ♂ (92 bytes) () 05/31/2011 postreply 20:05:47
• If the assets could not make money -caren- ♀ (227 bytes) () 05/31/2011 postreply 20:27:41
• are you implying that SD's asset can only generate profit -rx300- ♂ (150 bytes) () 05/31/2011 postreply 20:44:12