Why Vermilion Energy Stock Lost 19% in October

Oil-price moves pinched profits, but growth still looks good for this oil and gas specialist.

Demitrios Kalogeropoulos
Demitrios Kalogeropoulos
Nov 9, 2018 at 11:21AM
Energy, Materials, and Utilities

What happened

Shares of Vermilion Energy (NYSE:VET) trailed the market last month, shedding 19% compared to a 7% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline added to significant losses for the oil and natural gas company's shareholders, who are down 30% so far in 2018.

^SPX Chart

^SPX data by YCharts.

So what

Investors weren't thrilled with Vermilion's third-quarter report, which was released late in the month. It showed a 34% increase in fund flows from operations, a key industry growth metric, along with rising production in many of its drilling locations around the world. However, Vermilion booked a net loss for the period due to oil-price swings.

A pipeline runs through a field.

Image source: Getty Images.

Now what

Vermilion's stock-price drop has boosted its annual dividend yield to nearly 8%, which, combined with its monthly payout pace, might make the stock more attractive to income investors. Prospective buyers should balance those benefits with the major risks of owning Vermilion stock, including its sensitivity to oil-price moves and the company's aggressive acquisition strategy, which makes it necessary to hold large levels of long-term debt.