Why Energen's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of energy company Energen (NYS: EGN) jumped as much as 11% in early trading after the company announced earnings.

So what: Revenue fell 14% from a year ago to $418.4 million and missed estimates, but investors are focusing on the bottom line. Earnings per share were $1.33 and topped estimates by $0.15, and the company raised its cash flow guidance for 2012.

Now what: Liquids production was the driver of increased profits and will help results going forward. Lower commodity prices did affect revenue and also will have an impact on earnings in the future because natural gas doesn't appear to be near a recovery. But with shares trading at just 11 times forward estimates, and with such a good quarter to start the year, I think shares still have the energy to move higher.

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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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