(ARD) Arena Resources Incorporated – Exploration Companies Are Back In Favor

November 24th, 2009

Arena Resources Inc. (ARD) has posted big gains over the last 8 months on strong earnings and elevated energy prices.

Company Description

Arena Resources, Inc. engages in the exploration and production of oil and natural gas properties in the united States. The company was founded in 2000 and has a market cap of $1.58 billion.

With crude trading at elevated prices, exploration companies have fallen back into favor. This dynamic and strong third-quarter results, reported on Nov 5, has helped push shares of ARD back to the 52-week high.

Third-Quarter Results

Earnings for the quarter came in at 31 cents per share, 5 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last four quarters by an average of 2 cents, or 10%.

In a bid to expand its enhance and expand its operations, the Board of Directors approved a $27 million increase in its capital budget for 2009 to $107 million.

Estimates Rising

Estimates have generally been on the rise for the last few months. The current-year estimate has added 13 cents to $1.12. The next-year estimate is bullish, pegged at $1.75, a 57% growth projection.

Valuation

After the recent run up, shares do look a bit pricey, trading at 36X projected current-year earnings. The bullish next-year estimate helps temper the valuation a bit though.

The Chart

Shares of ARD have posted big gains over the last 8 months after bottoming out around $20 in early March. The 52-weke high is close at hand at $44.40, take a look below.


Zacks Investment Research

More on this topic (What's this?)
“Dinner for One” – Sarkozy and Merkel (Investment Postcards from Cape Town, 1/1/12)
Arena Resources to be acquired. Small cash component hurts the deal price(ARD, SD) (AlphaNinja, 4/5/10)
SandRidge Energy Acquires Arena Resources (Blogging Stocks, 4/5/10)
CMBS balloon risk looming (Sober Look, 8/3/09)
Read more on Arena Resources at Wikinvest

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