Comstock Resources Earnings Preview

Investors hope Comstock Resources (NYSE: CRK  ) will top analyst estimates once again after beating predictions by $0.01 in the previous quarter. The company will unveil its latest earnings Monday. Comstock Resources is an independent energy company, which is engaged in the acquisition, exploration, development, and production of oil and natural gas in the United States.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Comstock Resources with nine of 17 analysts rating it hold. Analysts don't like Comstock Resources as much as competitor Stone Energy overall. Four out of eight analysts rate Stone Energy a buy compared with eight of 17 for Comstock Resources. Analysts still rate the stock a Hold, but they are a bit more wary about it compared with three months ago.
• Revenue forecasts: On average, analysts predict $100.4 million in revenue this quarter. That would represent a rise of 10.8% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is a loss of $0.08 per share. Estimates range from a loss of $0.22 to a profit of $0.02.

What our community says:
CAPS All-Stars are solidly backing the stock with 96% awarding it an "outperform" rating. The community at large backs the All-Stars with 93.8% granting it a rating of "outperform." Fools are gung-ho about Comstock Resources, though the message boards have been quiet lately with only 63 posts in the past 30 days. Even with a robust four out of five stars, Comstock Resources' CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has fallen in the past two quarters. The company's gross margin shrank by 10.9 percentage points in the last quarter. Revenue fell 17% while cost of sales rose 27.4% to $27.4 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q1	Q4	Q3	Q2
Gross Margin	68.8%	75.5%	73.2%	75.1%
Operating Margin	-9.4%	-41.6%	2.6%	1%
Net Margin	2.7%	-28.4%	-5.9%	-1.8%

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