Approach Resources Earnings: Here’s Why the Stock is Down Now

Approach Resources, Inc. (NASDAQ:AREX) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 0.15%.

Approach Resources, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 160% to $0.13 in the quarter versus EPS of $0.05 in the year-earlier quarter.

Revenue: Rose 41.33% to $42.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Approach Resources, Inc. reported adjusted EPS income of $0.13 per share. By that measure, the company beat the mean analyst estimate of $0.07. It beat the average revenue estimate of $41.84 million.

Quoting Management: J. Ross Craft, the Company’s President and CEO, commented, “Our investment in infrastructure projects continues to have a positive impact on our bottom line. In the second quarter of 2013, our oil price differential relative to NYMEX WTI decreased 43%, compared to the prior year quarter, in large part due to our joint venture’s crude oil pipeline. In addition, we continue to see improvement in our per-unit lease operating expenses with a 19% decline, compared to the prior year quarter. In June 2013, we completed a successful offering of $250 million in senior notes to provide additional liquidity for the development of our 170,000 gross acre Wolfcamp shale position located in the southern Midland Basin. During second quarter, we also made several key additions to our management and technical team that further enhance our overall strengths. Finally, our horizontal well costs are continuing their downward trend, bringing us within approximately 5% of our target of $5.5 million per horizontal well. With growing oil production, improved price realizations, lower costs and a strong balance sheet, we are in a great position to capitalize on the full potential of the horizontal Wolfcamp shale oil play.”

Key Stats (on next page)…

Revenue increased 16.63% from $36.27 million in the previous quarter. EPS increased 116.67% from $0.06 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.11 to a profit $0.1. For the current year, the average estimate has moved down from a profit of $0.36 to a profit of $0.35 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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