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Why Shares of QEP Resources, Inc. Dropped Today

By Travis Hoium – Feb 26, 2014 at 4:00PM

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Is this meaningful or just another movement?

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 explorer QEP Resources, Inc. (QEP) fell as much as 19% today after the company reported earnings.

So what: Fourth-quarter revenue was up 1.5% to $715.5 million, but fell well short of the $767.8 million analysts expected. On the bottom line, the company lost $52 million and after pulling out one-time charges, earnings were $0.17 per share, less than half of the $0.40 per share Wall Street expected.  

Now what: Cold weather affected some operations and equivalent production fell 10% last quarter to 75.1 Bcfe, a big reason for the weakness in earnings. What's also concerning is that management doesn't expect growth this year, forecasting 283-307 Bcfe of production this year. With operations not growing at a significant clip, I don't see shares being worth 25 times trailing earnings, especially when you consider that the last four quarters have failed to miss expectations.

Travis Hoium has no position in any stocks mentioned, and neither does The Motley Fool. 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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