GeoResources, Inc. - Value
15 Abril 2012 - 9:00PM
Zacks
Looking for a way to play the shale boom?
GeoResources, Inc.
(GEOI) is a small explorer that is expected to grow earnings by the
double digits in 2012. This Zacks #1 Rank (Strong Buy) also is a
value stock with a P/B of 2.2.
GeoResources is an independent oil and natural gas
explorer with assets in the Bakken formation in Montana and North
Dakota and the Eagle Ford formation in Southeast Texas. It is a
small cap, with a market cap of $811 million.
GeoResources Beat by 5% in Q4
On Mar 13, GeoResources reported its fourth quarter
2011 results and surprised on the Zacks consensus by 2 cents. It
was the third consecutive earnings surprise.
Earnings rose 58% to 41 cents from 26 cents a year
ago. The consensus called for just 39 cents.
Revenue jumped 52% to a record $41 million from $27
million.
For the quarter, oil production was up 34%. The
company ended the year with a record net production level of over
6,100 boe/d.
The year was boosted by increased activity in the
key areas of Bakken and Eagle Ford with the Austin Chalk being the
third prong of growth.
Average oil price after hedge settlements was up
28% to $89.48 from $69.82 a year ago. Average gas price after
hedges also remained very high at $5.22 compared to $5.00 a year
ago.
2012 Zacks Consensus Estimate Rises
The analysts are bullish on 2012 as the shale
region remains hot.
9 estimates for 2012 have moved higher in the last
month, pushing the Zacks Consensus Estimate up to $2.13 from $2.05
per share.
That is earnings growth of 57% as the company made
$1.36 in 2011.
Shares Soar But Still Have Value
GeoResources has bounced back from last fall's sell
off. Shares hit a new 2 year high.
![](http://www.zacks.com/images/upload_dir/1334348891.jpg)
Yet, GeoResources still has value.
In addition to a P/B ratio under 3.0, which usually
indicates value, the company trades with a forward P/E of 14.8.
That is not the cheapest P/E ratio among its peers,
but it's under the 15x cut-off I use for value.
Investors interested in the shale areas need to
look beyond the big cap energy companies. GeoResources fits that
bill.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com. She is also the Editor of the Turnaround Trader and
Insider Trader services. You can follow her on twitter at
@TraceyRyniec.
GEORESOURCES (GEOI): Free Stock Analysis Report
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