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Evolution Petroleum Beats on Both Top and Bottom Lines

Evolution Petroleum (AMEX: EPM) reported earnings on Feb. 6. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Evolution Petroleum beat expectations on revenues and beat expectations on earnings per share.

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

Margins increased across the board.

Revenue details
Evolution Petroleum reported revenue of $5.6 million. The four analysts polled by S&P Capital IQ wanted to see a top line of $5.2 million on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $4.6 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 $0.06. The four earnings estimates compiled by S&P Capital IQ averaged $0.05 per share. GAAP EPS of $0.06 for Q2 were 50% higher than the prior-year quarter's $0.04 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 92.2%, 150 basis points better than the prior-year quarter. Operating margin was 53.6%, 140 basis points better than the prior-year quarter. Net margin was 34.7%, 400 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $6.5 million. On the bottom line, the average EPS estimate is $0.07.

Next year's average estimate for revenue is $25.8 million. The average EPS estimate is $0.27.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 225 members out of 235 rating the stock outperform, and 10 members rating it underperform. Among 46 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 44 give Evolution Petroleum a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Evolution Petroleum is buy, with an average price target of $11.75.

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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 position in any of the stocks mentioned. 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.

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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 February 07, 2013, at 10:55 AM, joblock wrote:

    2014 Production average estimates are 11,800 Barrels/day. Except for a period last summer, Delhi has exceeded its expectations.

    The forward curve for 2014 has Brent Crude north of $120/Barrel.

    CO2 and other costs for 2014 are estimated to be between $50M and $60M.

    Quick calculation of 2014 Delhi Earning Estimate

    11,800 BBL/Day * 365 Day * .24 interest = 1,033,680 Net Barrels to EPM share holders in 2014

    @ $120/Barrel is $124M.

    Net Cost = $60M * .24 interest =$14M

    Net Profit = $110M Float of 18.13M = $6.07/Share.

    Apply a reasonable price to earnings ratio of 8, and that values EPM $48/share

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