Why Energy XXI Limited's Shares Dropped

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 XXI fell 10% today after reporting disappointing fiscal second-quarter results.

So what: Production was up 20% from the previous quarter as operations recovered from a hurricane, but EBITDA fell from $225.6 million a year ago to $198.8 million this quarter. That drove earnings per share of just $0.48, which fell $0.20 short of estimate.

Now what: The earnings miss was huge but there may still be some upside with this stock. It trades at just 7.3 times forward estimates and the company is focused on growing reserves and production. With oil prices rising I think that's a long-term positive and the stock can move higher from here.

Interested in more info on Energy XXI? Add it to your watchlist by clicking here.

The article Why Energy XXI Limited's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.