Can Endeavour Shares Overcome These Negatives?

With shares of Endeavor International Corporation (NYSE:END) trading at around $5.20, is the stock an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Let’s look at the positives for Endeavor before transferring to full-on bear mode. Last quarter saw an 215 percent sales volume increase on a YoY basis, subsea pipelines and umbilicals have been installed ahead of schedule at Rochelle where first production will be in early 2013, the company has been awarded seven licenses covering ten exploration blocks in the U.K.’s 27th licensing round, there have been strong increases in Brent priced crude oil production in the U.K. North Sea, and the forward P/E is only 4.85.  

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The majority of the positive news above pertains to potential. When it comes to proven results, we haven’t seen much. Then again, that’s normal for a relatively new independent oil and gas exploration and acquisition company. We do know that Endeavour has estimated reserves of 22.7 million barrels of oil equivalent, but the profit margin is -119.08 percent, the operating cash flow is -$9.38 million, insider selling creates some concern, the stock has gone nowhere over the past five years, and Global Hunter Securities just downgraded the stock from Buy to Accumulate and moved their price target from $13 to $9.

Let’s take a look at some important numbers in order to get a better read on the situation.