Denbury Resources Inc. (fka DNRCQ)

[OilStockReport]

Key points to consider for DNR going into year end and 2012.

Denbury Resources, Inc. (DNR) is a small-to-medium sized energy company engaged in extraction of oil and natural gas in the Gulf Coast.

DNR’s recent financial history has been contrary to being “typical”, with wide swings in its topline during the last five years and more than doubling in 2010 over the previous year. However, the consistent pattern of net margins, which was disturbed due to a turbulent 2009, is still far from return to normalcy as the number for 2010 came out half (14%) against an average of 28% (2005-2008). Despite a consensus 2011 expectation for earnings growth of 78%, the stock is down 13% since the start of the year, which is only making it attractive.

The firmness of the case of “mean-reversion” of DNR’s price can be corroborated from the expected net margin for 2011 i.e. 23% which is a clear sign of consolidation of the company around its lost ground.