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What: Shares of independent energy company Venoco
So what: Were third-quarter results really as bad as the stock performance suggests? Yup, pretty much. Production was down from a year ago, and without much seen changing that in the fourth quarter, management decided to ratchet down its 2011 production guidance. The lower production held back total revenue, which, at $78.9 million, was well short of analysts' estimates of $90.6 million. Adjusted profit, meanwhile -- which excludes unrealized commodity gains and losses -- fell below even to a slight loss. Wall Street was looking for a $0.21-per-share profit.
Now what: As an investor, I have a preference toward companies that have a proven track record of consistently producing profits and positive free cash flow while maintaining strong balance sheets. For that reason, Venoco isn't exactly in my investing wheelhouse. For those who have seen some promise in Venoco shares, though, there's good reason to be a bit concerned about the results the company turned out this quarter. However, Foolish investors keep the focus on the big picture, so it's important to consider whether this quarter is a blip for an otherwise sound company or a trend that could continue on into the future.
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Fool contributor Matt Koppenheffer has nofinancial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.