Camber Energy (NYSEAMERICAN:CEI), an oil and natural gas company, is expected to report its earnings by May 20, but some red flags exist that are very worrisome that make the stock a Sell to my financial analysis. Here is why.
Camber Energy has delayed filing its financials on time and the last time it reported its quarterly results was back in November 2021 when it reported results for the quarter ending Sept. 30, 2020.
Furthermore, the firm has been given communication from the NYSE American exchange informing it that it was not compliant with the exchange’s continued listing standards. An extension has been given until May 20 for the firm to file the delayed reports.
According to the note, if the company fails to file on time, “Exchange staff will initiate delisting proceedings as appropriate.” This does not mean that shares of Camber Energy will be delisted if the company does not meet the requirements set by NYSE American, but the delisting risk remains elevated.
CEI stock has losses of 19% year-to-date, but in the last three months, it’s up nearly 28%. It’s down 10% on May 9 so far, having spent the day between 68 and 75 cents and with a 52-week range of 33 cents to $4.85.
With all that in mind, perhaps the biggest reason to sell shares of Camber Energy is the dilution factor. Shares have been substantially diluted in the past year, with total shares outstanding growing by 756.4%.
That’s not the only bad news, though. In 2019 and 2020, sales declined by 60.03% and 85.52% respectively. In 2020, the company reported a shareholders’ deficit of -$1.05 million. It has a cash burn problem too, with negative free cash flow for each of the last five years.
What are the odds that Camber Energy reports strong financial results by May 20? Based on all the evidence, it’s pretty unlikely. Investing is a game of probabilities and trying to get a high return while minimizing risk. Camber Energy offers the opposite: The risk is too high, and the likely return is too low. Avoid CEI stock, at least until the company files its financial results.
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On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.