Please ensure Javascript is enabled for purposes of website accessibility

Shares of EXCO Resources Surge 18% Yesterday Thanks to Better than Expected Earnings

By Tyler Crowe – Mar 3, 2016 at 10:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

EXCO's better than expected quarterly results and a general jump across the energy sector gave shares a lot of love today.

Image Source: EXCO Resources investor presentation

What: Shares of EXCO Resources (NYSE: XCO) ended up almost 18% yesterday after reporting a net loss for the quarter of ($0.24) per share, after adjusting for one time charges, the loss was a more modest ($0.03) per share.

So What: It's fair to say that the expectations for EXCO Resources, like so many other pure play oil and gas producers, were low heading into this quarter. According to consensus analyst estimates from S&P Capital IQ, EXCO was expected to lose ($0.07) on an adjusted basis. It appears that the market was happy that the company was able to jump over that low hurdle.

Another added bit of good news was that the company was able to reduce its total debt outstanding by $402 million compared to the third quarter while maintaining its total liquidity at $334 million. Any time that a company in the finanical situation like EXCO can lower its debt while leaving some borrowing capacity just in case things get worse, it deserves a little bit of love.

Now What: Anyone that already owns shares of EXCO should be slightly relieved to see yesterday's results, it suggests that it can stave off its creditors a little bit longer. While the market probably responded to this and increasing oil prices today, its important to remember that most of EXCO's revenue comes from natural gas, and prices for gas are still on the decline. EXCO's shares still have a long way to go to gain back all the losses over the past 5 years -- since 2011, shares are down 93% -- and with gas prices this low it's probably best for investors to wait this one out until EXCO has a more stable balance sheet. 

Tyler Crowe has no position in any stocks mentioned.  You can follow him at Fool.com or on Twitter @TylerCroweFool.

The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.