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Kodiak Oil & Gas Beats on EPS But GAAP Results Lag

Kodiak Oil & Gas (NYSE: KOG  ) reported earnings on Nov. 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Kodiak Oil & Gas missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share dropped significantly.

Gross margins expanded, operating margins shrank, net margins dropped.

Revenue details
Kodiak Oil & Gas reported revenue of $112.1 million. The 14 analysts polled by S&P Capital IQ wanted to see a top line of $119.7 million on the same basis. GAAP reported sales were much higher than the prior-year quarter's $29.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.13. The 17 earnings estimates compiled by S&P Capital IQ predicted $0.11 per share. GAAP EPS of $0.01 for Q3 were 93% lower than the prior-year quarter's $0.15 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 79.5%, 150 basis points better than the prior-year quarter. Operating margin was 32.4%, 7,120 basis points worse than the prior-year quarter. Net margin was 3.1%, 10,140 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $165.6 million. On the bottom line, the average EPS estimate is $0.16.

Next year's average estimate for revenue is $454.6 million. The average EPS estimate is $0.47.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 790 members out of 830 rating the stock outperform, and 40 members rating it underperform. Among 123 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 112 give Kodiak Oil & Gas a green thumbs-up, and 11 give it a red thumbs-down.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 02, 2012, at 1:16 PM, ganeshsastri wrote:

    Instead of using terminlogies like EPS and GAAP EPS, use: IMAGINARY EPS and GAAP EPS.

    Any thing other than GAAP is IMAGINARY - something that you cannot touch or feel.

  • Report this Comment On November 02, 2012, at 2:05 PM, hanover67 wrote:

    As a shareholder I am perplexed by the results of KOG's hedging practices which seem to prevent reported earnings from paralleling the growth in sales revenue. The reported EBITDA of $89 million for the quarter is the equivalent of "cash flow" of about $.38 per share, or a run rate of $1.52. If that was EPS times a P/E ratio of 10X, the stock price would be $15, not $9.

    When do the stockholders get the benefits of growth?

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