RECOMMENDATION
We rate ENERGEN CORP (EGN) a BUY. This is driven by a few notable strengths, which we believe should
have a greater impact than any weaknesses, and should give investors a better performance opportunity than
most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth,
expanding profit margins and solid stock price performance. Although no company is perfect, currently we
do not see any significant weaknesses which are likely to detract from the generally positive outlook.
HIGHLIGHTS
EGN's revenue growth trails the industry average of 19.7%. Since the same quarter one year prior, revenues
slightly increased by 8.4%. This growth in revenue does not appear to have trickled down to the company's
bottom line, displayed by a decline in earnings per share.
ENERGEN CORP' earnings per share from the most recent quarter came in slightly below the year earlier
quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS
growth in the coming year. During the past fiscal year, ENERGEN CORP increased its bottom line by earning
$4.28 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus
$4.28).
47.20% is the gross profit margin for ENERGEN CORP which we consider to be strong. Regardless of EGN's
high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of
the gross profit margin, EGN's net profit margin of 19.60% significantly outperformed against the industry.
Compared to where it was trading a year ago, EGN's share price has not changed very much due to (a) the
relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and
(c) other mixed results. Turning our attention to the future direction of the stock, it goes without saying that
even the best stocks can fall in an overall down market. However, in any other environment, this stock still
has good upside potential despite the fact that it has already risen in the past year.
The change in net income from the same quarter one year ago has greatly exceeded that of the S&P 500, but
is less than that of the Gas Utilities industry average. The net income has decreased by 1.5% when compared
to the same quarter one year ago, dropping from $67.90 million to $66.88 million.
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