Why Petroleum Development Corp.'s Shares Jumped


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 oil and gas explorer Petroleum Development Corp. (NAS: PETD) jumped 10% at the start of trading today before falling back to reality following the company's earnings announcement.

So what: Revenue jumped 93% from a year ago to $100.3 million, falling short of analyst estimates of $105.3 million. But the bottom line was much better where a profit of $0.66 per diluted share crushed estimates of $0.26.

Now what: Liquids production is increasing, a strategy most producers are employing, but I'm still worried about value. Shares trade at 19 times forward earnings estimates and the company has a history of beating expectations one quarter and falling short the next. I'd like to see a couple straight quarters of strong earnings before jumping in, but this quarter was definitely a good start.

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At the time thisarticle 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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