Why EXCO Resources' 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 explorer EXCO Resources fell 14% today after the company reported earnings.

So what: Third-quarter oil and natural gas revenue was up 16.7%, to $165.3 million, but the company lost $98.7 million, or $0.46 per share. Adjusted for one-time items, earnings were $0.04 per share, which was still below the $0.10 estimate from analysts.

Now what: One problem is that production was down 11%, to 455 Mmcfe per day, which was offset by higher energy prices. This is also the second straight quarter where results have missed estimates, and even adjusted earnings are trending downward. I'm going to stay away from the stock today and look for improved earnings in the future before jumping in.

Rising oil prices helping service companies
If you're looking for energy industry exposure without taking a bet on a specific energy play, it may be time to look at service providers. They benefit from increased drilling without the same risk as explorers. Our top analysts prepared a free report that reveals three stocks that are bound to soar as this trend continues. To discover the identities of these stocks instantly, access your free report by clicking here now.

The article Why EXCO Resources' 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.