Why Jones Energy, Inc.'s Shares Dropped Today

Is this meaningful or just another movement?

Feb 25, 2014 at 6:00PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of oil and gas company Jones Energy (NYSE:JONE) fell 13% today after the company updated operations.

So what: Jones ended the fourth quarter with reserves of 57.5 MMBoe, up 42% from a year ago. Production for the fourth quarter was just 1.7 MMBoe, due in part to bad weather across the country. For 2014, management expects production to be up about 30% to 22,000 to 23,000 Boe/d.  

Now what: Full results will be released on Wednesday, March 12, but investors clearly weren't pleased with production or growth projections. Until we hear the full numbers I wouldn't be too alarmed and with shares trading at less than 10 times 2014's estimates the stock could be a steal with the amount of growth it has. I'd stay on the sidelines until earnings are out because it's too early to make a final judgment on Jones' future until we get full results.

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Travis Hoium and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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