Resolute Energy Corp (NYSE: REN)
Resolute Energy is having an incredibly strong day in the market today, and for good reason. While the company missed expectations in a big way when it comes to earnings, guidance shows strong growth potential ahead. Today, we’ll talk about what we saw from the company’s Q2 report, how the stock reacted to the news, and what we can expect to see from REN moving forward. So, let’s get right to it…
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REN Reports Q2 Results
As mentioned above, Resolute Energy is having a strong day in the market today. While the company did report poor Q2 results, investors are excited about the future. Here’s what we saw from the report:
- Earnings – In terms of earnings per share, REN missed the mark in a big way. During the second quarter, analysts expected that the company would produce a loss of $0.03 per share. However, the company actually reported that the Q2 net loss came in at a total of $36.9 million. That works out to $2.44 per share, widely missing expectations.
- Revenue – Unfortunately, earnings per share wasn’t the only area where REN missed the mark. During the quarter, the company left much to be desired with regard to revenue as well. During the quarter, analysts expected that the company would generate revenue in the amount of $51.65 million. However, the company actually reported revenue for the quarter in the amount of $35.4 million. Once again, this figure widely missed the mark.
- The Good News – With the above data, it’s clear that Resolute Energy had a rough quarter. However, the company did release positive news that sent the value of the stock upward. The positive news was production guidance. In fact, the company increased its production guidance by 13%. On top of that, in the quarter ahead, the company is expecting to see low lease operating expenses that should lead to strong results. Finally, REN announced that its exit rate production for June was 15,400 BOE per day. This proved to be an all-time record for the company!
How The Stock Reacted To The News
As investors, one of the first things that we learn is that the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock as a result. In this particular case, while earnings proved to be negative, investors are overlooking Q2 results and excited about the future. As a result, we’re seeing strong gains in the value of the stock today. Currently (12:33), the stock is trading at $9.98 per share after a gain of $1.62 per share (19.46%) thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from Resolute Energy. In the short term, we may continue to see gains as investors cheer increased production and lower costs. However, it’s important to remember that REN is in the oil and gas sector, a sector that is struggling at the moment. To make matters worse, companies in this sector continue to increase production, which will likely lead to further supply glut issues down the road. As a result, if you’re going to get involved with Resolute Energy, make sure that you trade with caution.
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What Do You Think?
Where do you think REN stock is headed moving forward? Join the discussion at TalkTRENDZ!
[Image Courtesy of Wikimedia]