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What: Shares of Kosmos Energy
So what: Kosmos, which is focused on drilling in underexplored areas in Africa and South America, beat earnings estimates but still reported a $0.07 EPS loss, while revenue came in slightly below Wall Street expectations, down 11% from the previous year to $112.7 million. Part of yesterday's excitement came from reports that fields offshore Ghana were producing greater quantities than expected.
Today, however, Kosmos was downgraded from outperform to sector perform by RBC Capital. The stock has struggled recently, losing about 30% of its value year to date and nearly half since its 52-week high last October.
Now what: Since it went public over a year ago, Kosmos has had only reported one quarter with positive net income. The market seems to be treating this like a growth stock with a P/S over 5, but revenue declined last quarter due to lower oil prices. Sales are predicted to more than double in 2013 as more production comes online, but I'd prefer to take a wait-and-see approach. Kosmos seems like it has some work to do before it gains back investor confidence.
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Fool contributor Jeremy Bowman holds no positions in the companies above. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.